I was face with a tough decision when I awoke this morning. Price bounced of the double bottom depicted on M30 chart and approached the 21 SMA (yellow). When I noticed I missed the entry I planned on I was disappointed. “What a nice double bottom that is,” I was saying to myself. What concerned me was that price had to breakthrough a great deal of resistance (21, 50, and 200 SMA’s) at that point. Moreover, the risk reward wasn’t nearly as good at that entry point as it would have been off of that double bottom. I then began to ask myself if I should “chase this trade.” Well, I maintained my discipline and decided not to take this trade. Chasing trades has cost me a lot of money and I have learned through experience not to do it. I must admit, it was painful to watch my well planed trade unfold in front of my eyes as I thought about how much my P/L would have increased with that hundred pips. But I’m sure if I got back into the habit of chasing trades it would cost me in the long run. I am watching that 1.3720 area closely. A break and retest of that area I will be looking long. I may consider a short if that area seems to be holding as resistance.
I was just telling someone yesterday not to chase a trade. We trade the gbp/jpy pair. Two nights ago he called me just as I placed a trade. I trade plan my trades and trade my plan. Well once price started moving my friend took profit after about 50 pips then jumped back in (chasing price). He ended up giving back that days' profit. Meanwhile I stayed in the trade and was stopped out after 100 pip gain...I've learned the lesson of chasing price.
ReplyDeleteI have lost my days profit many times chasing trades. Planning your trades and trading your plan definetly keeps us from doing it.
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