Student's Question:
I took the advice from Daily FX Plus - Trading signals, as well as used a 1 year graph to find the support line.
There are two mistakes that I feel I made on this trade. First I didn't wait for the currency to reach my support line before I entered a trade. And second I left the trade way too early on fear that it might come back down, missing out on a large chunk of profit. See chart below.
Power Course Instructor's Response:
You make some good points here.
Beginning the analysis with a Daily chart to determine trend is the right way to go. Also, your trendline is quite valid as it has been tested several times.
Take a look at the chart below. There was a level of resistance that was broken through on about August 1. Based on that, there is a new level of support which appears to have been the base for this most recent bullish move. Being aware of that level would have assisted in looking for a potential long entry.
As far as staying in a trade to capture more profit, a trailing stop can be used or, if trading multiple lots, a portion of the trade can be closed out at a predetermined level of profit and then move the stop to breakeven on the remainder of the position. If the trade continues to profit, adjust the stop accordingly. If the trade reverses, the worst that can happen is a breakeven on the second portion of the trade but you have the profit locked in from the first portion.
