Today I had an experience that reinforced the principle of becoming an independent thinker in the Forex.
I had analysed my charts for the day just before the London open, and decided that I had found a really nice high probability set up on the GBP/USD, so I placed my buy order in with the broker and waited.
In the preceding 15 minutes I got into a conversation with a couple of students of mine who were asking me what I was going to be trading for that day so I told them about my trade set up.
One of them looked at this trade on his own charts and couldn’t see the same level that I was using for a support, the other one couldn’t see it either, so I decided that I must have an error with my price feed and that the data was somehow corrupted thus giving me a false level of support and I quickly cancelled the buy order with my broker.
Here is what the set up looked like:
As you can see above there is a white line and at the left hand side of the chart you can see an old high which the white line is drawn over. Along with this there is a pink line (central daily Pivot) and a 38% retracement level (yellow line) forming a nice confluence of support.
It was this old high that my students did not have on their charts.
Well you can probably guess what happened after I cancelled my but order!
Here it is below:
If you look at the white line you can see that as the price came down to it the reaction was almost instantaneous! And price raced off up into the profit taking levels which were about 300 pips away!
I did not get too upset because I know that there will be plenty more of these opportunities every single day, but I did think what a great lesson this was for me.
The moral here is to just trust all of the tools that you are using and also your own ability to spot a trade that matches your own plan without allowing outside influences affect the decisions you have already made. Next time I will think long and hard before I cancel my order!
