Patience at work in this Forex Trading example!
The USDCAD currency pair is not one of the most volatile pairs on the chart. You can trade it the same way you do with EURUSD or any other cross provided that what you’re picking doesn’t start or end with a GPB and JPY.
Anyway, on this particular day (Wed 7/12/2016), the USDCAD tested my patience. It was not a surprise though because I have faced similar situations with other currency pairs several times before. For this one, I chose to go Short because the uptrend line on the daily chart had been broken by one strong bear bar and two small subsequent ones.
Keep in mind that this was a support area, so I had to watch for this critical zone as well, just in case price bounced to the opposite direction.
You see, most newbies will opt to cancel a ”losing” position when it’s in the red zone and volatility is very minimal. One of the underlying reasons why this group of traders do so is because they lack patience to wait for the market to play out until it hits their Take Profit price.
Here is a snapshot of how the USDCAD market was playing at the time.
The uptrend had been broken by one solid bear bar. If you had put a Sell stop with 5-10 pips Take Profit right below the closing price of the beak out bear bar, you’d have netted some decent profit. By the way, I did this and I won the position.
Then I went short again at the lowest price of the last red candle. I did so because support had been broken, although it was not very apparent. After this, volatility subsided, hence the small bodies of the subsequent candlesticks.
Now, it was day 2 and price was looking like it was going to bounce off this area for the bulls to jump in. I can assure you that this kind of situation required nerves made of steel. I still refused to cancel my Sell position which was reading negative 30 plus pips against me.
As I am writing this, the position is still in the red zone, but I will not cancel it because I believe in my trading strategy and edge. I have also built the right patience level to be scared of such little things. Wait and see how price will behave afterwards. I assure you that it will drop until it hits my TP. It’s going to take days. But I won’t lose my sleep because I believe in my judgement. It’s called patience. I shall therefore publish the results here when it finally plays out in my favor.