i.e. why I haven’t gotten back into the Euro since November.
I’ve gotten beat by my emotions before. I had a disciplined trading system and I decided to deviated from the system based on what I was feeling. If I was anxious to trade or if I felt that I had to trade each day, I would figure out a way to get into the market no matter what the conditions looked like. After blowing my first forex account like most first time traders, I decided that if I was going to get back into the market, I needed to be sure that I followed my rules no matter what.
I’ve been feeling a little anxious lately because I haven’t placed a trade since around Thanksgiving time. The last trade was a great trade and I knew that the holidays would bring in lower volumes. So I had prepared to take off the month of December and come back strong in January. Unfortunately things didn’t look so good in January. So I waited a little more but continued to watch the price action each day and follow the closing prices each day. I decided to do a quick chart analysis today and make sure that I am making the right decision by waiting for the markets to quit bouncing around before I get back in. I am happy to say that my intuition was right and I should not be trading right now based on my rules. You can take a look in the chart below.
So I pulled up a daily candlestick chart for the EurUsd and overlayed a 200 and 50 EMA. December showed a nice trending area but like I said, I was not in the market so I am paying attention to the area right at the end of the chart. The price is bouncing around the 50 exponential moving average and according to my trading rules, I would have gotten killed. You might be wondering what my trading rules are. I can’t share them but I can tell you that they work well in trending markets and they involve using exponential moving averages. I also include fibonacci levels based on the macro environment. It takes a while to build a trading system and test it to make sure it works and once you do, you have to stick to those rules. So if you are a trend trader, be assured that sitting out is fine right now. Another option is that I could use a smaller time frame to catch some of those trends in the shorter time frames but I am not a full time trader and the shorter time frame I use, the more actively I will need to manage it.
How is your trading going? Are you all in right now?