Hey All! I am going to give you some great setups today at the end of this article but I wanted to start by sharing a real life experience I had with someone I am mentoring in trading about “Revenge Trading”. A certain young man I am mentoring has been doing awesome at trading Forex. I want to put that out there right from the get go. The first reason he is doing so well is because he has listened to every word I have said and he has also followed my advice. Following wise counsel means when I say trade demo then they do it or when I say go live, they do it. Also when I say trade a certain size and use a particular strategy then follow what I am saying. To be brutally honest if most people “Followed” my instruction like this young man has, I would have been able to train many more great traders. Unfortunately most people like to learn the hard way and therefore usually disqualify themselves before they have a chance to get started.
So now to my story about revenge trading, The person was up about 100% which is amazing but I was starting to notice as the wins got bigger his confidence was growing and he started to get a bit reckless in my opinion. Sometimes overconfidence can have that effect on you.
*Note When you have a great winning streak be on guard because overconfidence and then reckless behavior may then follow, which can be disasterous for your trading.
I then sent a skype message to him stating I think he needs to lower his risk because he was asking for trouble. Then it happened, I got a message from him saying that he had to close a big loser and he lost all of the gains he had made in a month and half. So when I heard this I evaluated the situation and thought that this was a very good thing and heres why:
- First He had the discipline to cut the loss before it was I call catastrophic and his entire account was gone.
- He still has all his initial capital so then it is very possible to make all the gains back because technically he had not lost anything.
- This caused pain, pain is good if you can learn from it. I hope he learned.
Next we had a discussion about revenge trading, Revenge trading is when you get crazy to try to earn you money back. You can read this educational article about Revenge Trading. After I told him not to revenge trade he said he wouldn’t do that and he learned his lesson and will be ready for next time. Now I fully expect that he will move forward and have a long and profitable trading career.
Last week I wrote about the NZD/Usd and how I like to buy on pullbacks and I actually ended up with two trades like that this week for about 35 pips each. Now there is a deeper pullback happening so I am going to be patient and if we get a significant pullback I will be looking for another great long setup off of one of the support levels I posted in last weeks post.
For this week I want to focus on the Euro again like I had done so long ago when I spoke about my anticipated Euro Bounce. Now that I believe the bounce has been established now we should start looking for some resistance for some potential sell setups. Not that this bounce is over yet but I am getting ready to look for my short position if I see a good setup. One Note is that there is going to be a Vote on Greece this Sunday so I would watch out for that.
Today I am going to one of my favorite trading tools and that is twitter. I get a great deal of help from wonderful traders on twitter all the time and If you don’t Follow me, you should so that you can get great updates throughout the week. The first hint I got this week about going Short was from @forexnathan on Twitter he posted a fantastic weekly chart. The next setup I found fascinating even though I personally do not use his method I was so glad that @AidenFX shared his Euro Chart on Twitter. Lastly @CJOLars shared that when he looked at the COT report he felt like the Euro is still bullish so lets keep that in mind as well.
Eur/Usd Daily Chart
I wish you all a great trading week please leave comments and feedback. Sharing a personal Story will go a long way to help another trader. Also I put a lot of time on my Saturday to put this together because I want to help you all so it would mean a great deal to me if you would share it via the social media button to the right if you have found it of any value at all.
One last thing take a look at another Eur/Usd Setup at Forex Abode.
And don’t get caught Revenge Trading!