As per my trading rules, once I get into the trade I dont make any adjustments to my trade (move SL or TP). One of the logics behind this rule is that once you are in the trade, fear and greed affect your analysis as a trader. So when I have to choose between my analysis BEFORE the trade or my analysis during the trad, I always choose the former one as that is the time when I am least emotional.
The only exception to this rule (of not adjusting SL and TP) is -
-If I am already in profit on the current trade
-And I find another very good setup on same or different currency pair
-Only then I bring my SL to breakeven on current trade.
The logic behind this exception is the following-
We all know that markets are volatile and things can change suddenly on any news event. If you have too many open trades, and if they all become losers than that can result in a big loss. To ensure this never happens to me, I allow myself to risk only a certain dollar amount at any one point in the market. This risk dollar is what I usually employ in my trade. Therefore, I usually only have 1 trade open in the market. If there is another good setup that presents itself and if I really like it, then I need to find some risk dollars that I can employ on this new trade. But my maximum risk dollars are already employed in my previous trade. So to free up my risk dollars in the previous trade, so that I can employ it in the new trade, I bring my SL to breakeven. By bringing SL to breakeven on current trade, it frees up the amount of dollar risk that I allow myself to take at any point in time. I can then use this freed up dollar risk on the new trade that I like.
Now here's my EURO analysis and my deliema:
There is a bullish pin bar formed at a swing low near S/R region on the weekly chart for EURUSD. This suggests to me that the EURO might be heading north next week. If this setup was formed on Daily chart, then I would have taken up this trade. But it is on weekly chart and I dont trade weeklys, so I am not going to take it.
As you would have noted in my earlier thread, I am currently shorting EURO based on a daily pin bar setup in the middle of this week. So now my trade does not align with my new view of the market. However, because I dont allow myself to adjust SL or TP when I am already in the trade, and the above mentioned exception to the rule does not apply here, I will simply keep my trade as it is. I am very much tempted to bring it to breakeven. But that will mean that I wont follow my own rules and that will be disastrous in the long run. I would rather take a loss on this trade and keep the integrity of my trading rules. If this trade turns out to be a loser than so be it.
The only exception to this rule (of not adjusting SL and TP) is -
-If I am already in profit on the current trade
-And I find another very good setup on same or different currency pair
-Only then I bring my SL to breakeven on current trade.
The logic behind this exception is the following-
We all know that markets are volatile and things can change suddenly on any news event. If you have too many open trades, and if they all become losers than that can result in a big loss. To ensure this never happens to me, I allow myself to risk only a certain dollar amount at any one point in the market. This risk dollar is what I usually employ in my trade. Therefore, I usually only have 1 trade open in the market. If there is another good setup that presents itself and if I really like it, then I need to find some risk dollars that I can employ on this new trade. But my maximum risk dollars are already employed in my previous trade. So to free up my risk dollars in the previous trade, so that I can employ it in the new trade, I bring my SL to breakeven. By bringing SL to breakeven on current trade, it frees up the amount of dollar risk that I allow myself to take at any point in time. I can then use this freed up dollar risk on the new trade that I like.
Now here's my EURO analysis and my deliema:
There is a bullish pin bar formed at a swing low near S/R region on the weekly chart for EURUSD. This suggests to me that the EURO might be heading north next week. If this setup was formed on Daily chart, then I would have taken up this trade. But it is on weekly chart and I dont trade weeklys, so I am not going to take it.
As you would have noted in my earlier thread, I am currently shorting EURO based on a daily pin bar setup in the middle of this week. So now my trade does not align with my new view of the market. However, because I dont allow myself to adjust SL or TP when I am already in the trade, and the above mentioned exception to the rule does not apply here, I will simply keep my trade as it is. I am very much tempted to bring it to breakeven. But that will mean that I wont follow my own rules and that will be disastrous in the long run. I would rather take a loss on this trade and keep the integrity of my trading rules. If this trade turns out to be a loser than so be it.
