© Dianne Fecteau, 2010. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.
Hi Dianne, I see you went against a positive divergence on the GBPJPY. Please can you advise me, what was you reason to go short and When is it ok to ignore divergence? If one has mix signals, is it best to stay out until you have more conclusive signals?
ReplyDeleteAs I wrote in another post, there's lots of divergence right now on several charts. It's the crappy, disorganized market we're in. Things will hopefully improve in September once some liquidity comes back in. For this pair, I had tried a long and gotten stopped at breakeven. Overall downtrend, longer term and shorter term is down. The move from 128.79 to over 133 looked corrective (3 waves on three hour chart). The pair failed at the resistance I spoke about when I first blogged about it this morning. Those are good reasons to short. I should have spelled it out more clearly in the blog. What the positive divergence did was cause me to take a smaller position than I might have otherwise. With all this you might ask why I ever went long earlier. I wrote in that post the pair looked as though it was trying to base (so a potential short term trend reversal, especially with the divergence.) This pair is tricky to trade under the best of circumstances and you probably want to avoid it.
ReplyDeleteDianne