Trade Vs. No Trade
Knowing when NOT to trade is just as important (if not more) as knowing when to trade.
Here’s a run-down of 3 trade entries and 5 NO TRADES as determined by advanced entry filtration using a combination of MACD, Price Action, Phase Lines and the 50EMA.
The highest probability entries are shown by the red short entry arrows. The NO TRADES are numbered 1-5 and explained below:
1. Bullish MACD divergence formed on the most recent swing low + the market is still quite some distance from the 50ema. The highest probability movements in FX accelerate away from the 50ema during the Power Move session (London Morning). No trade.
2. We’ve broken well above the 50ema. No short trade.
3. We’ve now formed a flag pattern to the upside, creating higher highs and higher lows within the pullback of a longer term downtrend. Trading well above 50ema. No short trade.
4. During the latest swing low, the market failed to create a lower low. It found strong support with bullish MACD divergence. Powerful break above the 50ema. Short trades suspended until support line is broken (preferably a retest to go short).
5. Neutral MACD lows, lower price lows. Stage 1 Bullish Divergence. Momentum is visibly slowing to the downside. It’s time to wait for a 4H or D pullback before continuing with short entries.
Summary:
8 Potential trades, 3 highest probability trades taken, 5 avoided.
The elephant in the room:
ALL 8 were profitable. Did we leave money on the table? YES! In trading, we ALWAYS leave money on the table. It’s impossible to catch every single move from the lowest point to the highest point. Striving for perfection is futile. The edge we trade is slight. You can make breathtaking profits in trading EVEN WHILE you leave money on the table, get it wrong, lose from time to time and miss out on runs all together. We trade probability, not perfection.
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