Price action rules the game

The downside breakout from the May-Sep broad triangle pattern in USDCAD was followed by an aggressive pullback. I entered short but after an early profit taking my second trade was stopped out at the initial risk.
The pullback has breached the level of the breakout which made trading the breakout tricky. However the price action (red line) did not violate the prior swing high maintaining the bearish bias.
The conclusion is that in trend trading it is the price action that rules the game therefore wider stop levels are necessary to tolerate price movements. The focus has to be on

  • correct trend recognition to be on the right side of the market,
  • trading pullbacks to allow closer initial stops.
  • Advertisements

    Leave a Reply

    Fill in your details below or click an icon to log in: Logo

    You are commenting using your account. Log Out /  Change )

    Google+ photo

    You are commenting using your Google+ account. Log Out /  Change )

    Twitter picture

    You are commenting using your Twitter account. Log Out /  Change )

    Facebook photo

    You are commenting using your Facebook account. Log Out /  Change )


    Connecting to %s

    %d bloggers like this: