Average Down in Trading Is a Big Mistake - Never Add to a Losing Position!

Hello my friends

I don’t have any introduction tonight. If you are new to my reports, please read the below page to know about my reports and the way I release them:
What Is Going on in the Forex Market?

Also please take a look at the previous reports to find my introductions and the tip of the day.

Tip of the day:

Never add to a losing position!

Sometimes you open a trade and it moves against you. A professional trader always has a proper stop loss that if triggered, it means the trade and the chosen direction has been wrong. But beginners sometimes don’t place a stop loss or cancel it when they see the price is so close to it. They hope that the price changes the direction. But the price doesn’t change the direction and keeps on going against you. You still keep the position.

Suddenly you see that it is showing some reversal signal and you think that it wants to move to your favorite direction now. As it has already moved against you, you think that you’d better to add to the amount of the trade because now it is moving to the direction that you want.

You think by adding to the trade, when it reaches the price that you started, you can close all the amounts and so you not only will not lose but will have some profits. But in many cases, after a few candle sticks, the price keeps on moving against you you lose more and more.

So …

1. Never let a trade keeps on moving against you. Place a proper stop loss and leave it.
2. If you didn’t let your stop loss to be triggered (which is a very stupid action), at least do not add to the amount of the trade.

Fundamentals:

Tomorrow, the Durable Goods Orders will be announced at 8:30am.

Ok! Lets analyze the market.

1. British Pound against US Dollar (GBP-USD)

It went up for about 70 pips during the current day. This is happened to all the currency pairs that USD is the second currency.

If you are already short and have some profit in your hand, keep your position and move your stop loss to a proper position to keep your profit in case it keeps on going up. But the weekly chart is still Bearish strongly. I still don’t see any signal for going long.

2. US Dollar against Japanese Yen (USD-JPY)

It didn’t have any significant movement today. We are still in holidays and the market is slow.

The new candle stick in the weekly chart is started above the Bollinger middle band but it is in the first day. It takes 7 days for this candle stick to be formed completely. Something that the weekly chart says is that the price is moving around the Bollinger middle band and usually (not always) the price goes up and down in this area. So It is not a good time to take any position according to the weekly chart.

But the Bulls look very strong on weekly chart. So it is highly possible that the price keeps on going up.

3. Euro against US Dollar (EUR-USD)

We have a good head and shoulders in the daily chart. When I say “good” I mean its reversal power is high. When a head and shoulders is forming, you have to keep an eye on the second shoulder. If the second shoulder goes down and breaks the Neck Line, it will go down. This is happened here. As the head and shoulders has been strong, so the price will keep on going down although currently it is going up.

The weekly is strongly Bearish and currently it is testing the 38.20% Fibonacci level.

I think we should expect to see something that happened from January to April 2004 or December 2004 to July 2005:

4. US Dollar against Swiss Franc (USD-CHF)

This currency always moves against the EUR-USD:

The weekly chart says that USD-CHF has not been able to break the 38.20 Fibonacci level. So it means it will go down.

But if the USD-CHF goes down the EUR-USD should go up. Let’s wait for a few days and see.

5. US Dollar against Canadian Dollar (USD-CAD)

The price is testing the 38.20% currently on the daily chart.

If you were short, fix your profit.

The same thing in the weekly chart:

Going down has a higher probability because the weekly is strongly Bearish.

6. Australian Dollar against US Dollar (AUS-USD)

The Bollinger middle band is broken. Now the price is under the 23.60% Fibonacci level. As the Bollinger middle band is broken so it is possible that it keeps on going up but as it is under the 23.60% it is possible that it goes down, tests the Bollinger middle band and then goes up. But going up has a higher possibility. If you are already long, move your stop loss few pips under the Bollinger middle band.

The weekly still moving around the Bollinger middle band.

7. New Zealand Dollar against US Dollar (NZD-USD)

Beautiful channel on the daily chart. It went up but has not broken the Bollinger Middle Band yet. If you are already long, keep your postion.

Weekly chart is telling us that the Bulls are getting stronger again. So it keeps on going up. Please note that it is not a good time to open any new position. Only those who have a long position from long time ago, can keep their positions.

8. Euro against Swiss Franc (EUR-CHF)

It is still Bullish.

9. British Pound against Japanese Yen (GBP-JPY)

Although it went down a little but it is still trying to go up.

Going up as predicted:

The weekly chart is becoming Bullish too:

10. Euro against Japanese Yen (EUR-JPY)

Wow! It went up for more than 140 pips as predicted. But be careful if you have a long position. It is so close to the resistance and it may bounce down. Move your stop loss higher to keep the maximum profit. Weekly chart is strongly Bullish.

11. British Pound against Canadian Dollar (GBP-CAD)

Although the current candle stick is Bullish but it still has several hours to become completed. This currency pair is still Bearish strongly. If you are short get ready to fix your profit. We have to wait and see if the current candle will go lower than the red line or not.

12. Euro against Canadian Dollar (EUR-CAD)

Showing more Bullish forces in the daily chart but Bears are still so strong. The weekly chart is strongly Bearish.

13. Euro against British Pound (EUR-GBP)

The last candle is forming a Bearish candle but it is still too early because it has several hours to become completed. We should wait until tomorrow evening and see if it is time to go short or not. The weekly is Bullish strongly.

14. British Pound against Australian Dollar (GBP-AUS)

The daily and weekly are still Bearish strongly. Keep your short position.

15. Euro against Australian Dollar (EUR-AUS)

It has formed a descending wedge. The rule says a descending wedge in an uptrend will break up but I don’t trade according to these rules because the market doesn’t follow them in many cases.

The weekly says that it will go down. So we will go short as soon as it breaks the support.

16. British Pound against Swiss Franc (GBP-CHF)

It is still Bearish.

The weekly is showing some Bullish signals. Let’s wait until tomorrow and see.

Further Reading: Before leaving our website, please take a look at the other articles we have published.

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