I started watching the market a little later than usual on Monday. Even though I live in the US, I usually like to start watching the markets when they begin heating up around the European open (3AM EST). There’s usually some pretty sound trading opportunities in the hours leading up to when the New York session opens. Nonetheless, if you’re tired, never force yourself to trade. Just about everyone knows (or has experienced) that insufficient sleep can negatively affect your decision-making (even if you feel fine otherwise) and having a fully rested, clear mental state is essential to trading effectively.
For my first trade of the day, I took a call option just after the open of the 7:30 candle (green arrow). The price level I had been eyeing was 1.3000, an ever-important psychological level that the EUR/USD will regularly show some sensitivity to. To add on to that, my daily pivot point was located just a pip underneath at 1.2999. The best set-ups for my liking are those that provide “confluence,” or a point in the market where more than one factor is favoring my taking of a potential trade set-up. In this case, I had both the psychological level and the pivot point going in my favor. Still, I retained a sense of patience (the most important mental trait that a trader can have, in my honest opinion) and waited for a rejection of 1.3000 and subsequent touch on the next candle to take my trade. Fortunately for my trade set-up, the 7:25 candle had rejected the pivot and 1.3000 price level. Admittedly, I was a bit weary that the momentum was a bit strong in the downward direction and would essentially be a counter-trend trade based on the general trend that had been in place since about 4AM EST. Nevertheless, based on my judgment, I found it to be a trade set-up where the odds were working sufficiently in my favor so I took the call option at 1.2999, believing the 1.3000 psychological support would ultimately hold. Was it something I’d consider to be a 5-star set-up? No, but I thought it should have better than a 60% chance of working out based on my experience and therefore a trade worth taking.
As you can observe, the trade did not work out, and I lost by a bit over four pips. But that’s alright. Just because a trade loses doesn’t necessarily mean it was a “bad” trade. I followed my basic strategy as always, but not all trades are going to work out. Although I realize I didn’t take a perfect set-up for the reasons aforementioned, it’s unrealistic to expect to win an absurdly high ratio of your trades. I’ve never really been able to win over 75% of my binary trades for extended periods of time. Even if you’re only hitting on about 60% of your trades (a realistic long-term goal, in my opinion) then you should be turning a net profit so long as you aren’t taking terribly low payouts. At this point, I’m simply not willing to trade assets that don’t give me at least an 80% payout, and preferably above 85% (I get 89% on the EUR/USD on 24option). Otherwise, the profit margin is just too low and mediocre payouts do nothing but cut into whatever percent advantage you have on the market if you are applying a strategy that works and is profitable.
Anyhow, I wasn’t yet finished trading for the day. Although my initial prediction that the EUR/USD would trace back up upon encountering 1.3000 wasn’t correct, it did get back up above that price level shortly thereafter after a very brief dip below. The next price level I was targeting was 1.3010 (where I have my red line drawn in on the above screenshot).
What I had going for me in this potential put option set-up were two very recent instances of price support – which could act as new resistance – and the fact that the overall trend for the morning was down. That was enough “evidence” for me to believe that a put option would mostly likely work in my favor should it eventually turn into a viable set-up. Therefore, I waited for the touch of 1.3010, a close back underneath it, followed by a put option taken on the touch of 1.3010 on the subsequent bar (8:15 candle). It wicked beautifully again and I ended up with about an eight-pip winner.
That was the end of my trading day. Although I had actually lost money on that day, that was okay. One needs to realize that in trading you aren’t going to make a fixed amount of money each day like you would at a normal day job. Some days (or weeks, or months, or years) you will operate at a net loss, and some days you will make money. As long as you have some sort of edge on the market and the statistical probability is in your favor with regard to making profits from your trading, over time you will make money. On the days in which I lose money I always realize this at least in a subconscious sense. And in both trades, I had applied my strategy just as I always did so despite the lack of profitability it was still a successful day in my book.