Analysis of the Dollar Yen buy trade July 12
After a short-term decline on the 30-minute chart, I saw the possibility of a narrowing correction and further growth in line with the main trend. I planned to trade inside the correction and in case of breaking through its borders and the top of 137.750, hold the trade for maximum profit until the start of a new correction. Stop loss was set at 136.510, which was below the key level of 136.550. Thus, I saved trade against a trend reversal.
My very first mistake is the preference for indicator signals on smaller timeframes. My attention was focused on 30 minutes, while at 4 hours there was no clear position of indicators to buy, and on the hourly chart, there was a MACD in the sell at all.
The second mistake, which is quite controversial is the stop loss (usually controversial topic).
There are several options that could happen:
1. There is no stop loss, the trader chooses to hold the trade or not. There is a chance to get out of losses by showing patience and self-confidence and also chance to increase losses and .
2. There is a stop loss, but the trader sees that the market has reversed and closes the deal prematurely, without waiting for the stop loss, showing caution and self-confidence. (The one I chose)
3. There is a stop-loss, the trader waits until the last, until the trade reaches it or goes into profit. The trader shows confidence and patience.
On the chart, you can see that the touch of the stop-loss level was not clear and the market immediately reversed. This also leads to the conclusion that the stop-loss level is chosen with a slight inaccuracy. So setting a proper stop loss and holding the position without an early exit could have been profitable for me in the longer term, as you can see the market is already far higher.
In a conclusion I would like to note that even small inaccuracies can lead to losses, as well as the trader’s behaviour and confidence. It is important to find a balance between caution and confidence.
In my case, I made a choice in favour of caution, but further I worked through the mistakes and in the next trades I managed to achieve record high results.
Any trade, regardless of profit amount, brings you closer to success, because the most important thing is experience.
