Today is 12-Jan-2012, just after the Frankfurt market open, I saw the trend is uptrend. Should I long or short EUR/USD?

The rule is following the trend, I buy the EUR/USD. The stop loss is to set 5 pips below the previous low, it was 1.27027. I was working, so I didn’t pay attention to it. Do you see any problem with this stop loss?

The following price action was a pull back to 1.26984. I was swiped out then the price went up again.

If you still didn’t see the problem, you need read the lessons on babypips… My stop loss was 2.7 pips above 1.27000. This price is an import psychology price. This is so apparent mistake to set the stop loss. I should set 5 pips below 1.27 not the previous low. A good lesson learned for psychology price.

Lucky, I bought EUR/USD again and made back the pips lost previously.

1 Transaction costs:

That is, trading pips spreads, few people pay attention to this problem, just a few points of difference that need not surprise this idea is wrong, unless you are holding a few corners to Dances of children, but if you want to survive for long in this market and you want to trade or industry for a living, then this will be your problem can not be ignored exchange dripping from rivers, small steps and thousands of miles to the truth surely you are aware of these transactions a two pen can be negligible, But one thousand million pen pen must have its virtually trading loss is another person whom tip the scales
Recommendations: first choice of trading partners should first focus on those straight plate currency, select the direct monetary benefit is not only set you can reduce transaction costs, and you can easily find a large number of news reports on their analysis of data and other kinds of information, which the novice’s growth and trade is good

2. Interest rate differential:
On the interpretation of spreads I think I do not need too much nonsense, if you are a day trader or short-term traders can not do super-considered, but if you are middle-band trader or traders, position held for several days or even months , then you have to consider these if you happen to be short a currency pair high low interest rate currency, then the interest rate differential will eat into your profits Moreover, a lot of successful trading is to become a middle trading day trading, trading center line into long-term trading transactions and why? Because transactions are done using master chase prices stop, rather than panic cut positions, then the prices in their favor, they tend to stop using this way to make profit out of the far, far away On the contrary, if the transaction becomes the center line became a short-term trading, can only show you the deal failed and why? Because the trend toward a different direction with your admission, you stop being touched
Recommendation: as much as possible to do more with high-yielding currencies with low interest rate currencies such short entry in the right direction if you can not only get the profit trend to give you, you can also earn interest income, why not?

3 Frequent Trading
Too frequent trading is the most concentrated expression of the trading novice, expert real opportunity to find decisive admission, novice like headless flies Huangbuzelu frequent trading will not only increase your transaction costs, but also give you a tremendous physical and psychological pressure, you struggling to cope with pain from the frequent trading transactions were not sure what key position and timing of admission, but also because they are greedy, they do not want to lose any opportunity that is the expense, not only the loss of valuable resources, spend more of their fighting spirit
Recommendation: efforts to master a variety of key positions identify the skills and experience to develop through the temper of the trading strategy, moving steadily.

This is an interesting trade!

Set up is: Pending Long@1.2775 with SL=20pips; TP1=1.2820(+45pips);TP2=1.2848(+73pips)…

SL hit at 1.2755. A short Price Action formed after candle closed at 6pm. Entered Short@1.2759, SL=20pips; aiming TP2@1.2670(+89pips)…TP1 done!

TP2 hit +89pips…Net profit=89-20=+69pips!

Setting up can be analyzed through support level, resistance level, trend line, trending signals can be higher highs, higher lows for uptrend, lower highs, lower lows for down trend. Double tops for starting of down trend, double bottoms for up trend, etc.

From this example, we can see that money management is so important. If we didn’t set the stop loss, we will lose more.

Emotion is so important, some people will stop trading when their first stop loss is triggered. Traders must be flexible, when they see the price action is against the expectation, we should adjust our trading immediately to follow the trend.