I have decided to change the format of my blog a bit. I will be sharing with you my real-time trades. In this way, It will be easier for you to grasp some of the trading concepts discussed in previous posts.
Currently, I have a long position in AUD/USD.
Aword of caution! It is important to keep in mind that we are dealing with probabilities. There are no certainties in trading and no one knows where the market is going. If you look for certainty in life, you better stay away from this craft (trading). Also, do not trade money you cannot afford to lose.
Start small!!!
So let´s get down to business.....
From a long-term chart, we can expect AUD/USD to move higher. The weekly chart has just gone through a rather deep retracement after the break of major resistance (BMR), which took place in 2020. The BMR suggests a changing trend in the pair and we could be at the beginning of a long-term uptrend. We will see on this one:)!
If we are dealing with a trend change, we need to accommodate our trading style to this new market environment. All we have to do is to buy price corrections and continuation patterns.
I have placed my limit order at 0,7113, which I consider an area of significant resistence. If the price moves to my limit, I will take my profits and watch the subsequent price behavior to initiate new trades.
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In case the current consolidation does not resolve in a move higher, I have placed a protective stop. The stop limits my total loss on this trade to no more than a fraction of my total equity. I will delve into the risk management part of trading in another post.
A recommended reading: Fooled by randomness by Taleb.
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