When Do You Say Enough Of Trading The Same Trading Setups?

• When you have been waiting for hours watching a trade setup develop
• and you believe that that trade setup has a high potential of giving you a profitable trade
• and when you get the trading signal, you get into the trade.
• But soon price moves against your trade and maybe because your stop loss is bit too close or that there is a price spike that just managed to knock off your stop loss…so you are out of the trade.

But you are still convinced that the market is going to go in the direction of your trade that got stopped out.

And then another opportunity to get into a trade happens again on the same currency pair at just around the same level of the original trade you did...or can be a few pips away from the level. Regardless, lets say the 2nd trade signal happens “around” that level of the first trade signal.

The big question is…should you take the shot again or forget it because you’ve just made a loss on the first try? (Note: this would be for the same trading setup on the same currency pair).

Well that’s the exact same situation that happened today with me and I decided to write this post to share with you what happened why I did what I did.

HOW I TRADED and WHAT HAPPENED

I trade using  price action with support and resistance. I am really not a fan of moving average trading systems but I do use them just to see dynamic support and resistance levels of price bouncing of the moving averages.

• I have been monitoring the AUDUSD currency pair to make a rally upward to around the 0.8644 level to short it
• because it was a major support level which was broken last week and
• I anticipated that if price went back to that previously broken support level, there’s a great chance of it to act as a resistance level.

Eventually the trade setup came to fruition:

• I saw a pin bar on the 1hr timeframe and this pin bar happened in the price level of a previous major support level which was broken. This also  happen to coincide with a  downward trendline on the 1hr chart.
• I placed a short trade and about 2hrs later I got stopped out.I got stopped out with roughly $300 loss trading 1 standard lot.
• But I still was convinced that sooner or later, audusd would turn south.

So I continued to watch for the next couple of hours…and this is what happened.

• Price broke above the trendline and went up
• and 3hrs later, a pin bar formed about 10 pips away from the trendline.
• So I waited for an opportunity to go short again on the AUDUSD at a good price.
• The next candlestick that formed after the pin bar was a green candlestick.

But I switched to the 5minute timeframe to see if I could get a better entry instead of placing my sell stop order under the low of the bearish pin bar…

Why?

1. This is so that I can, first, get a better entry
2. and second, reduce my stop loss distance, therefore my risk.

When I saw a bearish reversal candlestick in the 5min timeframe, I shorted the AUDUSD again for the 2nd time.

At the moment of writing, this second trade is around 50 pips in floating profits. So if I were to close it, I would be up by $200 profit and would have recovered my $300 loss placed on the first attempt.

WHY I DID WHAT I DID

The logic of the first trade was easy…

1. it met all the criteria I needed to go short like confluence of resistance level with trendline
2. and confirmation of trade entry with the formation of a bearish reversal candlestick pattern-a pin bar.

But price was not yet ready to move at the point where I entered, so that’s why I got stopped out.

My reasons for taking the 2nd trade were these:

1. A major resistance level was there and even though price broke and went past it by 36pips or so I was still convinced that the market would turn and head back down.
2. Just soon after breaking the downward trendline, the 2nd one hr candlestick to form was a bearish pin bar. So this indicated to me price has not moved far away from either the broken trendline or the resistance level before showing signs of upward weakness.
3. In addition, this bearish pin bar also formed exactly on the 61.8 fib level.

That’s my  reasons for taking the 2nd trade. I will see how it pans our tomorrow. In some cases, I get in wrong and I will lose twice on the same trade setup. In other cases like this one, I get it right.

The important thing here is as long as you are not risking too much on each trade and the risk is within your acceptable level then you should be fine.

SO IN SUMMARY

• not all trading setups will work this way so you should be really careful trading this way as you can lose a lot of money from trading one particular setup on a single currency pair if you risk too much per trade.
• But there will be times trading this way will reap you big profits.
• the forex market is volatile so therefore many times you get stopped out on trades that could have gone profitable so sometimes if and when that happens you should take a 2nd or 3rd trade attempt if your are convinced that the market will go in the direction of your previous trades.
• for my case, I watched closely the price action of the market after I got stopped out on the firs trade and had the fib level as well as price showing weakness not far away from the broken trendline that gave me the justification to go short again.

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