This in itself was not a major concern to our long position as levels are not hard levels but zonal areas. Price can and will often dip below support levels in pullbacks in a bull trend before the bulls push price action back in the direction of the major trend. Likewise with resistance levels in a bear trend.
If price continues to weaken, we then look for the next key support levels to hold strong. With the GBPCAD , this was first with the daily 50SMA and then the high of January and then finally the high of December. Further weakness on the GBPCAD meant price made light work of the daily 50SMA and the January and is now directly at the December high.
This is our last barrier to staying in this trade which we will then look to exit with a small loss.
Amongst several elements that are the key ingredients to good trading is the understanding of impeccable risk management across multiple high-probability instruments. In an ideal world, every trade you place works out, and that can happen. But what is far more likely to happen is a mixed bag of winners, losers and break evens. The percentage break down of this will vary year to year as market conditions are organic and unique year to year and market to market.
The focus should then not be on how many winners you have but on how large your winning trades are. This is achieved by cutting your losers short and letting your winners. And then compounding into winning trades only. The significantly larger profit from the winning trades will absorb the smaller losses from the losing trades and also go on to grow accounts.
The challenge that many face is never staying in a trend long enough to ever see the power of compounding in action. This is not due to a lack of ability but due to a lack aligning oneself with the natural movement and features of the market. The focus is always on the money first rather than the process.
For one to grow an account effortlessly, year in year out, your knowledge first and foremost has to be worth more than the money you have.
Holding 5 trades throughout the duration of say an 8 month trend is significantly more powerful in growing an account compared to opening and closing multiple trades a day. The latter is simply advertised as the sexy way to quick money but there is never anything sexy about compromising time for money and in the end not achieving success.
The GBPCAD is looking like one of those currency pairs that may not deliver this year compared to say the EURSEK which currently is looking far more promising. But we are still in the GBPCAD and price may bounce tomorrow and have a very different outlook in the following days.
Only time will tell.
Any comments or questions, do not hesitate to leave them below. Hit agree if you share our sentiments!