Eventually, on this trade, I had a maximum loss of almost 0.5% of my capital. However, sometimes in a lost trade, there’re one or two lessons we could gain:NOTE: I captured the attached 5min chart screen before price moved completely against me.
From the 5min chart above, you would notice my Limit Order was triggered @ 1.6375 – the fib 61.8% ret. Initially, price moved in my favor by about 28pips (to around 1.6347); however this was still a bit far from my initial target-level to take profit @ 1.6328 (which I’ve highlighted using the blue dashed line) – that would’ve been 47pips profit (the amount of pips initially risked). I might also have considered taking some profits anywhere from above 30pips; and adjusting my Stop Loss afterward.
The point I would like to make here is: with this method, price would often move a few pips in our favor before reversing against us – in the case of an unfavorable trade. During such periods, it’s absolutely left to us to determine the way we manage our trades.
For some, with this same method, this particular trade could have been a break-even trade – unfortunately, not for me.
The good news is my account is still well funded to comfortably take another trade – since I’m relatively very conservative at taking risks.
Warren Buffett’s hint:
Rule number one, don’t lose money. Rule number two, don’t forget rule number one. Rule number three, don’t go into debt.
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