WEBVTT

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Here we have United States dollar against Canadian dollar on a daily chart.

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It's easy to see that the price is in a strong downtrend.

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The buyers tried to break this down trend here but now the price is going down again.

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Switching to a 30-minute chart, I have identified this down channel that incorporates price movements

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for the past two weeks. Since I have a down channel,

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the strategy is quite easy:

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I'm going to look for a bearish signal at the top of the channel. Right here,

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I have three good candles.

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I have a doji, followed by another doji, followed by a long red candle that forms a bearish engulfing

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pattern with the previous candle.

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So I'm going to open my position right after this bearish engulfing pattern.

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This is my entry

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at 1.2530, then

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I want to place my stop loss outside the channel.

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So 1.2555 should be ok, because I also want to place my stop loss over this

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high here.

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Following my tips about the take profit, I start to place my take profit here

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at 1.2480,

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so I have a risk to reward of 1:2.

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Of course the price can reach this level, so there's no point to decrease my take profit.

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But maybe I can increase it, because I'm still far from the bottom of the channel. So I'm going to move

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my take profit by other 25 pips, at 1.2455.

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Let's analyze what happened to our trade on United States dollar Canadian dollar.

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You can see that it didn't go very well and I lost my position in a couple of hours.

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I'm glad that I took this trade for three reasons.

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The first one is that I don't want to give you the idea that it is easy to make money on forex trading

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and that you will always win your trades.

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This is not my first losing position and it won't be my last one.

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You need to accept that from time to time you will lose your trades.

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You can't be right 100 percent of times.

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The second reason is that you can see the importance of the stop loss.

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Without it, I would still have the position on the market with a loss that is at least twice the one that

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I had. Last reason is that I made a mistake and I'm glad that I can share this mistake with you so you

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can avoid it in the future.

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I simply didn't have a look at the economic calendar for today and I forgot that there were two important

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news for the dollar right after my trade.

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You can see that the news were pretty important and they were positive for the United States dollar

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so I didn't have many chances to survive with a stop loss of 25 pips.

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So going on OANDA Web platform, I have my trade here and you can see that it didn't go very well this

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time.