Update: Priceline Reached, Waiting for Break & Self AnalysisSo things are going to plan, so far, we saw the rally, the market failed to break yesterday's high. And price has followed the breakout pattern and returned back to the price line. A break through would put this move comfortably back in profit like I mentioned in my last update. These are all positives. But I can't help but thinking about the fact that I could have been 80 pips up on this move instead of 15.
I usually wake around 12:30 am to check the charts and get ready for the London open. But this morning I actually didn't wake until 7:00 am, which cost me because had I woke up, I would have managed this trade slightly different, and I thought this would be a good opportunity to critique this position, in hopes that you guys can learn from my mistakes.
1. My first entry wasn't good...both of my orders were designed for different scenarios, you can see in my original post for this trade that I was speculating about two reversal points, but I couldn't be sure which one it would be until it played out. In order to avoid losses, I placed the stoploss for my first entry above my second entry. The downside to this, was that my average fill was still too low to be safe from price going against me. You can see that my second entry came within 10 pips of the highest high we've seen these past couple days SO...if that had been my only entry, I could have run a much tighter stop and made a lot more money.
2. My biggest mistake was not taking profit when price got back down to my first entry. This would have freed me from that first entry and given me an opportunity to get back in at supply with a tighter stop and better RR.
If you're wondering how I find these supply zones, I use the fib tool and I look for a spike with the open and close within a 31% ratio (like the one in the top left corner). Keep in mind, a spike can last more than one candle. So a candle that gets engulfed by another can also be considered a valid spike, so long as the open of the first candle and the close of the engulfing candle lie within a 0 - 31% ratio. For a bullish spike, take the fib tool from the lowest point and drag up to the highest point. Do the opposite for bearish spikes. A bullish spike must be followed by a bullish candle to be considered valid, and a bearish spike must be followed by a bearish candle to be considered valid. Spikes should only be used to mark supply and demand zones if they happen in an area of value, or POI.
I also use the distance between (highest highs and the next highest close) or (lowest lows and the next lowest close) as supply and demand zones as well.
3. You can see that had I done this I would have been able to get back in, and be over 30 pips up now this second time around, putting me at around 80 pips taken these past two days. I should have done that. If I felt like a rally was coming then it would have been wisest to exit my position at demand and get back in at supply.
I hope you guys can apply this to your trades and avoid this mistake in the future!
