My trading life is not as dramatic as the Alaskan salmons. I certainly am not looking to spawn and leave my body as bio-fuel for my kid. I just want to collect some pips. But there are times like today when I do change my spots and go with the trend.
This morning I was camped out at EURUSD 1M. Bossilator showed 500 which is usually a time for a counter-trend back to the SMA800. Practising my good trading methods, I was supposed to wait for stochastics to go oversold before I could buy.
I really am working hard at "waiting for a trade setup". Honest!
Well I waited and waited and then the market suddenly sprang down to hit the previous low. Around 10:13 GMT. So I did a naughty and jumped in with the trend SELL 1.3408, Exit at 1.3388 for a quick 2:1 (+20pips).
I have noticed that there are times when the EURUSD 1M Bossilator reaches it's usual extreme readings e.g from 500 and above and the currency pair still wants to continue in the trend.
EURUSD 1M 24Nov11 Trend Sell
Fresh from the earlier 20pips, I started in the US session, waiting for a Bossilator counter-trend trade to setup for EURUSD 1M. Bossilator was already at 800, at 60 pips, it was good enough for a 2:1 trade. I was just waiting for the stochastics to pop back and down and maybe create more room before I started trading it back to the SMA800.
While I was waiting, the stox looked like it was getting ready to oversold territory, but this time, it didn't go down, it just curled back up and started moving up. At then it plowed through 3400 and then hit a resistance around 3410.
I had seen this kind of behavior before - $EURUSD gets turned around after it hits a major 00 resistance. I drew my Fibonacci with Trifecta ratios with the 0% at 3370 since it had been hit as a support 2 previous times today.
As you can see, up top, I didn't take the break of the 23Fib, instead I took the horizontal trend line break at 3389. I figure that if I put in a really tight stop of 10pips, and the 2:1 risk reward, it was good enough to go.
I made a decision that if $EURUSD started to turn back down - I would take it down if it broke 3390. So looking at it from a Trifecta trade, it hit the 23% Fib, and started turning down. I didn't enter here since it did this very quickly and I thought it might still go counter-trend because of the Bossilator readings.
The nice thing was that EURUSD started to stall around 3370. So I had time to give it one last look before I took the trade. Very quickly it went to 20pips which is 2:1 for me. So i just closed it for a quick +20pips.
So I'm starting to get back in the game with +40pips today.
The moral of today's story is there are times when extreme Bossilator readings happen. And the currency just wants to keep going. In those times, just put on your trend trader hat on, hold on to a 2:1 risk-reward and trade in the direction of the flow.
Happy Trading!