The Dangers of Counter-Trend Trading
NZD/JPY long position
Filtered from the 30 minute chart and viewed from the 1 minute
- Price was ticking higher yet above the 50 moving average
- Programmed exit at 76.25 (whole numbers and fractions as exit signals)
- The Vertical Lines as times of the day
My entry was at the second test of support at 75.90 I didn't think I would be filled, but I was long and I did not experience that much pain initially (that is usually a good sign)
Since I entered below the 76 handle I thought it might bounce by a factor of 15 to 35 pips and that is exactly what happened.
For something like this, Think or Swim has shown us 7 hours of holding period, how long that feels for you is more subjective, this felt like nothing at all for me because day trades make up about 10% of my focus
What is also very clear about this chart is that I exited at a great time. So with all of that said, bounces because of mean-reversion opportunities come quite often, but in the end it would have been a disaster if I held on to this long position with so much strength in the Yen.
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