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Blanks of the trader

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Lat week proved to be a bit of the cool down for the run of winners i had recently, got involved only in 1 trade out of 3 setups that i had prepared for that week. So far long from 1.3012 on EUR/USD  did not prove to be "right" or "wrong" decision, market seem to respect 1.30 area as pivot support, to elaborate on these conditions see the potential setup and chart below. What came out of last weeks trading, was the fact that i was able to eliminate two other setups that proved to be losers when looking back. What was crucial in those situations was ability to clearly measure risk that has to be taken onboard. Despite having valid trading signals, i did not take them as risk was far too huge in relation to my trading size, and at the end is saved me from two loser trades. This example touches one of very important subjects of having correct account size balance in relation to the market conditions. For instance some trader with bigger risk aversion would be able to afford taking those trades, meaning that perhaps the chosen contract size is far too big for the denominator of the market, causing ability to trade even weakest trading signal, which is never a good idea in my book that leads to overtrading. Surely it may not be such a bad idea if the system has very high winners percentage, however as a general rule of thumb i would suggest to make leap to the same market, but with higher denominator contract in order to reduce number of fake-outs. It all comes down to understanding leverage one may take on on the trade, overall the higher the leverage the more risk is involved as big guys using 1:1 leverage can afford huge stops that will not make much difference to their account as comparing to someone using 1:200 leverage same move can wipe out big chunk of the capital.

Next week will not lack setups in my portfolio watchlist as well, however some of them seem to be more mid to long term based on the range pace that those markets are moving. French CAC40 has two potential Cypher patterns setting up, where one may coexist with the other under certain circumstances. On the chart below more immediate Cypher in red will require about 150 pips of risk taken on board if completed, again many retail traders will be filtered out of this one perphaps. What seem to be attractive about this setup is that it can lead to another Cypher on bullish side. There is good potential run on both sides of this currently sideways market, will be really interesting to see how the situation will unfold for next couple of weeks.

Earlier mentioned EUR/USD has potential at the market open buy setup. We have seen AB=CD pattern completing last week in addition to that there is very distinct bullish divergence on 4 hour time frame. If this pair will open above 1.30 level that is strong buy signal in my book that can provide very good R multiple number in terms of Risk/Reward.

Finally USD/JPY pair is on the way to complete last CD leg of the Shark pattern on 4 hour chart. Very early days still there about 500 pips away from completion.

Have a good one traders!


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