Join Paul every Tuesday-Friday for webinars. For details and a full line-up of all upcoming live events, please see the Webinar Calendar.
Today, I fielded questions of varying variety from trade execution to trade management to trading psychology.
One question asked: How do I stick with trades I enter for swing-trades, but end up taking the intra-day gains? One of the ways to do this is to stay away from the faster time-frames which may cause you to change your mind based on very short-term price fluctuations. Reduce the noise. Another solution is to consider the pain of watching the trade you are in ‘get away from you’ because you didn’t stick with your target. Watching a good idea go to waste is one of the most painful feelings a trader can experience – more painful than taking a responsible loss. So, when you feel that urge to exit consider weighing the risk/reward of how you will feel by letting a winning trade get away from you versus possibly getting stopped. This can help put you in a better mindset for being disciplined about sticking to your pre-determined stops and targets.
Another trader said they are frequently stopped out and asked, where is a good spot to place my stop? The process of trading typically goes something like this: We identify a potential opportunity, but then have a ‘trigger’ which gets us into the trade. This could be a breakout beyond a key level or a reversal off a price level or some other indication which fits within your strategy. The simple answer, is to place your stop at a point just beyond the invalidation point of your entry signal. For example, a trader might use key reversals or engulfing bars to enter the market once a certain price level is reached. If, say, the trade is from the long-side then a stop placed below the low of the signal bar would be a prudent approach. Also make sure to place it sufficiently beyond the invalidation point to allow wiggle room. My colleague, James Stanley, recently published a good piece on trading price action with new trends, and gave a similar explanation of this concept.
For more questions and answers, please see the video above.
See our quarterly forecasts for FX, equity indices, and commodities to see where our team of analysts see markets heading for the remainder of Q2.
---Written by Paul Robinson, Market Analyst
You can receive Paul’s analysis directly via email by signing up here.
You can follow Paul on Twitter at @PaulRobinonFX.
