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Chapter 14, Part II. Double top and Double bottom. Page 9

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 20, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

    Aug 28, 2009
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    Commander in Pips:

    A bit later you’ve seen a Hanging Man pattern and entered short somewhere around 0.76 with stops above the highs of Hanging Man.

    Chart #6 | JPY/USD futures weekly. W-bottom pattern

    Take a look by the way – the second bottom slightly lower than the fist one – this is what I’ve talked about.

    In such circumstances you should close half of position at nearest 0.382 Fib support level – 0.7374, remain another half of position intact but move stop loss to breakeven – 0.7664 (suppose that you’ve entered from this level). It will allow you to get small profit even if you were totally wrong. Here we assume that you do not recognize your mistake absolutely.

    Commander in Pips:

    If, suppose, you’ve recognize it a bit later – than you should close the total position at the nearest support level – the MACD trend absolutely does not confirm this position. You have to be flat instead, because MACD shows up, pattern shows down – with contradictive signals, it is better to stay flat:

    Why? Here is why:

    Chart #7 | JPY/USD futures weekly. W-bottom pattern

    But don’t be frustrated too much – even if you haven’t done it and taken the loss – it is not so crucial, you have your stop loss in place – just above Hanging Man high.

    Here we give you just a common clue how to act on the market:

    1. Enter the trade and place initial stop loss;

    2. When the market has hit the nearest target – close half of position, move your stop loss on the remaining half to breakeven and wait for second target;

    3. If you’ve found that you are on the wrong side – close total position at nearest level.

    We advise you always to act in this way. You will remain with some profit, even if you’re totally wrong. Do not catch huge moves – your task here is to conquer pips and save them.

    P.S. This lesson was written by Sive Morten, who has been working for a large European Bank since April of 2000, and is currently a supervisor of the bank's risk assessment department. Sive's knowledge of forex market and banking industry is vast and quite complete. If you have any specific questions about forex, banking industry, or any other financial instruments, please post them on the next page and Sive should answer soon.

    Note: FPA ranks are earned in the battles against scam, not in the classroom.
    #1 Sive Morten, Dec 20, 2013
    Lasted edited by : Mar 26, 2016
    Hamza Samiullah and fran alvarez like this.
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