Having the Tendency to Trade My P&L

Have you ever looked at an open position, see that it's in profit, and have this urge to close it? If so, you'll relate to me easily. There were two trades that got the best of me as I feared more of returning my profits than capturing the entire move. Let's take a look.

USDSGD 1-Hour

I entered on a very nice hourly level. Price pulled back and then began trending upwards. However, I sat with a nice profit, but then I saw price began reversing. Long story short, I closed this trade out of fear that I would lose my profit. You can see that I closed my trade after a bullish uptick.

My flaw was that I was more concerned with a temporary drop in my open profits instead of assessing the underlying price action. At this point in time, I think there were quite a few key points that I should've analyzed.

USDSGD 1-Hour

Let's take a closer look at the setup. There were three key points that I should've analyzed before closing my trade out of fear.

#1: Very weak bearish price action

The red candles being painted were very weak. Since there isn't a reliable depth of market in FX, we can only make an educated guess as to what these bars mean. However, we can be quite certain that one of two things is happening:

Selling pressure is being supported by a consistent stream of buyers. As a result, price isn't able to dip significantly lower.
The general lack of volume so smaller sell or long take profit orders are causing this fall in price.

If I slowed down and analyzed this, I would've realized that there was literally no need for concern. There wasn't anything that indicated an actual trend reversal.

#2. Hourly support

I entered at an hourly support level. I could've waited to see how price reacted off of that support level. If there were a lot of pending limit orders there, this could've sent the price soaring given how weak the selling pressure has been. If price didn't hold this level, I could've closed the trade at breakeven or a small loss. As I entered on a critical level, there shouldn't have been a need for panic.

#3. Upwards trending

As signalled by the moving averages, this pair is currently trending upwards. The overall pair is moving in the direction of my trade regardless of what is going on with the short term activity. The overall momentum is in my favor so there was absolutely no need for panic here.

There's another trade that I'm not particularly proud of. Here it is below:

EURGBP 1-Hour

I won't go into too much detail here as it has a lot in common with my first trade. Same idea where I saw a big drop and decided to close out. However, I neglected to realize that price didn't touch any significant resistance level and that this pair is still in an uptrend as indicated by the moving averages. Fearing that I would return my profits, I closed out and missed the bigger move.

To end this learning lesson, I'd like to reference a quote in the latest Limit Up! podcast episode. I really liked this interview with George Papazov. He said something along the lines of:

"Professional athletes aren't constantly looking at the scoreboard. That's for the audience. Professional athletes are focused on playing the game."

As long as I stick to my risk management rules of 1% to 2% per trade, it's okay to take on losses. My job is to take trades that have high directional probabilities. Some will work out, but not all. I need to focus on playing the game to the best of my ability rather than watching the constant fluctuation in my account balance.

Instead of focusing on what could've been, let's try and do better next week.