Summarized Analysis, Trading Plan, and Results:
Firstly, there was a rising channel and the price was resisted and has begun to fall.
In the M15 chart, the price is forming lower highs and recent low has broken below the previous swing low that suggests for the price to fall further.
A retracement channel was forming and for som reasons, I plotted it in a certain way to convince myself that a retracement channel has completed and thus I went for a short.
The whole plan is for the price to fall through from the top of the rising channel and my stop loss was set at 20 pips away from FR88.6%.
The result was a loss of 1.38% as it hit stop loss in the early morning while I was asleep.
This is rather embarrassing as I’ve broken a number of trading rules here.
Number 1: Do not leave a trade naked overnight
I should have never left a trade unattended that has yet to move in my direction and make a profit where I can shift my stop loss to reduce risk. This is because I won’t be able to cut loss when the market is already going against me. But if I’m asleep, there’s nothing I can do.
Number 2: No trading after midnight
The problem of trading after midnight will cause me to break my rule number 1. It is not easy to have a trade going in your direction shortly after you entered and especially market hours after midnight are not volatile.
Number 3: No trading before major news
Now, usually, it is about 1 to 2 hours before a major news that I should not trade. But over here, we are talking about U.S. Presidential Election. To make it worse, I just told my traders to not trade during this period of time.
Number 4: Be truthful with what you see
If you look at the M15 chart again just before I shorted, the retracement channel was INCOMPLETE. The moment I try to play tricks with my eyes to convince that it is completed, here’s the result.
I can remember what has exactly gone through my mind…”if the 2nd retracement were to form in its intended way, it is going to break above FR88.6% and that will break the retracement channel structure.”
So I force the candlesticks into my channel and make it seemed completed when it is clearly not.
Well, the good thing is that I’ve made mistakes like this at least 5 times lesser than the past ever since I started to record my trading journal. You should do it too if you are reading this.