Summarized Analysis and Trading Plan:
The price was seen breaking below a major rising trendline and the bottom of a falling channel, signaling for the price to fall further and towards the major support zone.
In the M15 chart, the price began to make retracement and I actually went into M5 chart to identify the 2 waves of minor retracement (pause). This eventually becomes a mistake that rolls onto another mistake. Never go smaller than M15 chart to squeeze a chart pattern out (resume). The trade was entered at 1:44 pm, 2-3 hours before London market hour, shorted with 1/2 risk.
The price went into consolidation and finally formed clearer waves of retracement in the M15 chart. At the same time, the price has broke above the top of the previously and wrongly spotted retracement channel in M5 chart and thus I’ve cut 1/2 position. Upon spotting the retracement channel that’s formed nicely
Upon spotting the retracement channel that’s formed nicely on the M15 chart, I decided to short again, this time with 1/4 risk plus the risk that has been saved from cutting 1/2 position. The trade was executed at 6:11 pm (pause). According to my trading rules, I will not trade more than 1/2 risk after 6 pm on Friday as the market is closing and will cause the market to react abnormally. (resume)
The stop loss was set 20 pips above FR88.6%, together with the previous trade as the stop loss was set incorrectly due to the wrongly spotted retracement.
Stop Loss, Close Manually
The price did not fall immediately after the retracement channel. Instead, it attempted to break higher and because I was too focused on M5 chart, I saw that the price is breaking higher than the top of the retracement channel and just 2 pips before it hit my stop loss, I did a manual exit and all the trades, taking almost the maximum loss.
Another rule was broken…I do not manually close a trade that is only less than 10 pips towards the stop loss level to avoid a sudden reversal that can revive a trade…and so it happened exactly the way.
The price, after a spike upwards, resumed depreciation and fall further and eventually broke below the bottom of the retracement channel swing low. It was, after all, going in the right direction based on my analysis.
This is how a good trade turns into a bad trade: First, an initial wrong way of identifying a trade setup, 2nd overly-focused on the running trade resulted in speculating within M1 and M5 chart and finally, confusion was caused and the wrong trading decision was made over and over again.
Result: Loss 2.15%