Never Buy High
More specifically, never buy into a high. I made two mistakes this week. They were so costly that they wiped out a streak of small wins because the trade opportunities that I had identified didn't generate any momentum.
My chart annotation explains it all. Since I didn't see a daily candle close above the relative high, there wasn't a clear momentum indication.
Keep in mind that the positions I've plotted in my chart are approximates since my execution is done via a different platform.
The two mistakes I made both occurred on yen pairs. As a result, I basically leveraged the mistakes.
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| NZDJPY 1-Hour |
In summary:
- I entered to buy into this breakout continuation to the upside.
- I'm buying into a high rather than below the level as a pre-emptive play expecting upside breach potential. What this means is that my entry wasn't fully optimized.
- The final point is that I ignored the higher time frame structure. See the next image.
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| NZDJPY 1-Day |
My chart annotation explains it all. Since I didn't see a daily candle close above the relative high, there wasn't a clear momentum indication.
This mistake, or the lack of higher time frame consideration, also persisted over on CADJPY.
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| CADJPY 1-Hour |
In summary:
- Same problems as with NZDJPY.
- One difference is that CADJPY has a shittier hourly price action. I'm surprised I still entered given that I didn't see more dominant bullish bars pushing above previous highs.
On the other hand, I did take a small win earlier in the week on a different yen pair. Unfortunately, the profits did get wiped out by NZDJPY and CADJPY.
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| USDJPY 1-Hour |
Keep in mind that the positions I've plotted in my chart are approximates since my execution is done via a different platform.
After taking a trade to the long side anticipating a level breach, I capitalized on a reversal to the downside. Just like with the long, my short trade didn't fully capitalize the move. I prematurely exited at the first price stall. In situations like these, I need to have the confidence to be able to hold the position and ride out the very short term fluctuations. Otherwise, I'm locking in a smaller than desired R.
If my observations have taught me anything, price reversals don't really happen suddenly. Yes, profit taking will occur. However, reversals can occur when there is a clear indication that price is failing to push higher.