AUDNZD On Daily Chart Using CCI. Loss Trade
In this example I am going to discuss a loss trade. You can see that in real life not all trades end up being winners. As long as we abide to strict money and risk management and we follow sound and proven strategies, we will end up at a profit. I will not discuss money management and risk/reward here. I am assuming you are familiar with these concepts and if not, please use your favorite search engine to read and learn about them. You can never become profitable in the long run if you don't follow these rules!
The order was executed on Jun 3, 2015. Here I used a system that takes advantage of a few indicators. Keep in mind that I try to stay away from indicators. In this case, they are simply filters or confirmation to the trade. The pair is AUDNZD. CCI (those of you who don't know what it is please look it up before continuing) on the daily chart had exceeded +100 - a strong bullish signal, all other technicals seemed OK so I took the trade (long). The only problem here was that I could not achieve good risk-reward ratio by placing the S/L around the nearest support so I made it tighter enough so I can achieve at least a ratio of 1:1. This was my first mistake. My second mistake was that MACD had not formed a "squeeze" and was a little too wide for my liking. Please research the MACD indicator on your own and come back if you have to. The way that this strategy works best is if you take trades when there is a MACD squeeze.
A few days later my stop loss was hit. I also endured a prolonged draw-down. It may have been just a strike of bad luck but I also made the mistakes outlined above. Nevertheless, I was still at an overall profit from all my other trades so I guess that's just part of life.
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