#GBP/USD - Here we can see price approaching the supply zone
(red box). Usually this would mean a strong selling opportunity since it hasnt been previously breached in this chart. The reason a trader may be hesitant to sell is because if it does drop
, it is more than likely to react to the closest support level
which is at A. If i have placed my stop loss at B to give the trade enough room to push up to the next resistance level
without stopping me out, the risk/reward ratio works out to be less than 1:2 which isnt a statistically benificial trade. Reguardless whether price actually does drop
, sticking to a traders personal rules is the key difference between calculated risk and speculation.