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Chapter 36, Part I. Scaling of Position. Page 5

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 28, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    I see that you do not feel confident enough with that issue – taking a part of profit. Here is another example for you on the weekly time frame:


    Chart #2 | EUR/USD Weekly
    [​IMG]

    I will not describe all the details here. Let’s assume that you intend to enter long, since weekly upward momentum was really strong. In October you see that market is approaching an Agreement area 0.618 minor support level at 1.3214m and 1.618 downward extension from initial AB-CD pattern of retracement from the 1.4925 high. This is also looks like a Gartley “222” buy pattern from 1.2870-1.4925 swing. Let’s suppose that you’ve entered long somewhere above 0.618 support and placed a stop below the most recent swing low 1.2870. Your initial target is the 0.618 extension from the most recent swing up at 1.4412. You think that the market should reach at least this extension, since momentum up was solid. What has happened later – you can see on the chart. You will get absolutely different result if you took some profit or not. Also just imagine that you have ended potentially profitable trade on weekly time frame without any profit. And have spent approximately 3 months on it. What a pitituful perspective…





    Pipruit:
    Pitiful perspective? This is an absolute nightmare!

    Commander in Pips: Oh, I’ve got it! You need to see big numbers to feel it absolutely. :) When you see the possibility to miss 800+ pips profit – that has some impact!

    Pipruit:
    Ok, ok. I see the difference with smaller numbers too… What’s about scaling in?

    Commander in Pips: Right. This is a bit tougher process that demands more responsibility and discipline, since you are increasing your position – hence adding more risk.



    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 them soon.



    Note: FPA ranks are earned in the battles against scam, not in the classroom.
     
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