Trade Another Day
A great trade opportunity appears on our chart and sometimes we miss the timing for a good entry. Hesitation, overthinking or not at the computer at the right time, we watch as the pips quickly tick up. Many a time I have looked at a chart and watched a potential trade opportunity get away. It is as William Arthur Ward said “Opportunities are like sunrises. If you wait too long, you miss them.”
How many times have we seen a candle like this? The candle forms as price continues higher and it seems we have missed the opportunity. Take the following GBPNZD chart, Figure 1, as an example. This was a set up I was considering at the time.
The short-term GMMA had just passed up through the long-term GMMA and I was anticipating a further upwards price movement. Price moved up quickly and I missed my opportunity.
Over several hours, Figure 2, we see this candle was the first of many candles as price continued to rise higher. Price continued to a peak of 1.9600. An incredible 242 pips over the next 9 hours achieved before the London open. It’s a human tendency to get emotional about missing out on such a great trade. Make a conscious effort not to dwell too much on what could have been. Step away from the computer if you need to or just take a short break. It’s not the last trade in the market and the market will be there for you tomorrow. There will be another good trade opportunity in the future. Guaranteed. I decided it was time to call it a day. In my time zone it was evening and I was looking forward to a good night’s sleep.
The next day, with fresh eyes I looked for another opportunity.
On the GBPUSD daily chart, Figure 3, the short-term GMMA had passed down through the long-term GMMA. Price was sitting underneath both groups. A downtrend was emerging on the daily chart.
On the GBPUSD 1 hour chart, Figure 4, the moving averages were widely separated in both the short-term GMMA group and the long term GMMA group. This indicated a strong support for the downtrend in place on the 1 hour chart. A short trade position was opened at the entry price of 1.3719 as marked by the blue arrow, with a Traders ATR stop loss of 1.3753 and a profit target of 1.3675.
The details of the calculated values are shown below.
Short Trade: GBPUSD
Open Price on Daily Chart = 1.3752
5 Day Average Daily Range = 103
75% of ADR = 77
Current Price = 1.3719
Traders ATR = 1.3753
Profit Target = Open Price - 75% of 5 Day ADR
= 1.3752 - 77
(75% 5 Day ADR calculated level)
Potential Reward = Current Price – Profit Target
= 1.3719 – 1.3675
= 44 pips
Risk = Current price – Traders ATR
= 1.3719 – 1.3753
= 34 pips
Price moved down and in the next hour reached the profit target of 1.3675. The trade was closed as marked by the star at 1.3680. A profit of 39 pips.
When a good trade set up is missed, the natural urge to enter and not miss out is strong as price moves in your predicted direction. For GBPNZD, it would have worked out if we quickly jumped on board but it doesn’t always work out this way. The markets provide endless opportunities for potentially good trades. We may wait too long and miss the sunrise but just like trade opportunities if the time is right you might see one every day.