What do you do if you are stuck in a EUR/USD long?, May 26 2014

Dear traders,

tonight I have prepared a brief video for a follower who asked for help on how to limit damages in a very difficult situation where he is stuck in a long.

While my position and the rules of conduct and ethics I gave myself do not allow me to provide advice, it did not take long for me to decide what was right to do after briefly re-experiencing the pain and feeling of loss and pressure of all the times I find myself in a similar situation in the past. Yes it did happen, a number of times. In the video posted below I have analyzed the EUR/USD in the daily, 4-hour and 15min timeframes hoping that my opinions on price action in this market can be of help to all the inexperienced traders who are currently stuck in a long in the Euro and are at risk of having their capital whipped out, especially if they are using leverage.

I hear the same story over and over again, and I have make public some recent data I gathered from one of the largest Forex brokers in North America in relation to the problem of using leverage, over-committing oneself and not using stops. The numbers are still very bad: 22% of Forex traders do not use stop-losses and end up getting a margin call, eventually losing amounts – in average – between $2,000 and $6,000.

Depending on where the entry point is, it may be difficult to exit without having losses. Each market has is own peculiar character. And we know that the EUR/USD likes to trade in extension shorts when it start trading lower. On the larger timeframe (weekly) we have all the indications for a possible revisit of the 1.30 area. It happened in the past and it could happen again.

On Monday and the opening Asian session of Tuesday we witnessed a recovering price in the Euro. This market is now reacting higher after 12 sessions of a continued downwards move. Daily and 4-hour chart are showing a potential short participation of Program Trading (and professional traders) in the 1.3710-1.3725 area. Of course the market could go higher and the hint, as usual, will be provided by the action in the 15min chart.

The smaller 15min timeframe is currently showing a sequence of extended measured moves higher, which currently has the potential to push market higher into the 1.3672 and 1.3782 area before the next measured move short is likely to materialize. On the downside, piercing the 1.3655 first and 1.3652 later would be a confirmation that the move higher is like ended and we could witness a continuation lower.

Of course this is the most likely outcome, is not the sure outcome, because anything can happen in the market. The latest statement is the very reason we need to keep always our risk under control and leverage should not be used in trading.

The secret to making a living in trading is to work hard (like in any other entrepreneurial initiative) and learn to trade keeping the risk small (1% at each trade or lower). It takes time, but when you master the game you are in control. You can add more money and manage other people’s money, too. And when you do that you can prove and assure the people you manage money for that you have solid risk management, because you learned how to read market structure and become expert at it, while knowingly taking only low risk trades.

You got yourself interested and/or into a business in which if you do 20% or 25% a year you are a “superstar”! Why on earth would you risk it all to have a very little chance to make %1,000 in one year (in reality a 99.99% to lose everything, especially if you are leveraged) only to get a margin call and be wiped out?

I know I am being blunt here. But hold on the game, do it exactly at the time it delivers the harshest lessons, and you will be a winner!

I wish to you all the best and I hope that, if you are stuck in a EUR/USD long, you will come out of it with a minimal damage in capital and, especially, psychology.

Notice that price projections in my method are not from/to random levels and do not follow Elliot Wave, DiNapoli levels or other methods, but rather a proprietary method based on modeling effects of Program and Algorithmic Trading on price.

I help traders “level plain” the trading game showing what banks, institutions and big hedge funds are actually doing (and not what they are saying they are doing). Follow my work to learn how to spot the Algorithmic Trading footprints.

I send a free Newsletter in the weekend and provide updates throughout the week. The newsletter typically includes 3 video reviews for (1) EUR/USD, Dollar Index, S&P500 emini and Gold emini; (2) the Japanese Yen majors, i.e. USD/JPY, EUR/JPY and GBP/JPY; (3) the other majors: GBP/USD, AUD/USD, USD/CAD. Please, register here to receive the free weekly newsletter.

If you like this article, please share it with your friends and fellow traders.

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Should you decide to operate based on this information you are invited to do your own due diligence, consult a registered trading professional, as well as, understand the risks involved. This information is for educational purpose only. Please read the Disclaimer and accept all involved risks.

Thank you.

Have a great day


The FibStalker Giuseppe, ~the FibStalker


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Filed under Articles, Education, English language, Forex, Market Timing, Trading Plan, Trading Psychology

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