Don’t Be a Careless Trader - Always Double Check Everything

Hello my friends

As you saw today it is good to take a look at the weekly chart at least once every week. This is what we did last night and you saw the result during the day. Weekly chart signals is even more important than the monthly because monthly is a very big time frame and doesn’t work for most of the personal traders like you and me. It is good for the banks and big super swing traders.

Do you have fat fingers?

This question may look a little strange to you but fat fingers is a problem for the forex and stock traders. I am sure this is happened to you to enter a wrong number when you are typing. For example you want to enter 1000 but you enter 10000. This will not be any problem if you are writing an article but it can be a big problem if you are trading with the real money in a forex or stock market. You press the 0 button more than enough!

This is called fat fingers effect. It is not really because of having fat finger that cover more than one button on the keyboard. It is because of the lack of attention and concentration on the work.

It always happens during the day that you see the price that has been going up or down, suddenly jumps to the opposite direction and hits your stop loss. This can be related to a news release but why it happens when there is no news release? It can be caused by two things: 1. A big trader buys/sells a huge amount of a currency pair or 2. A careless trader trades a huge amount of a currency pair by mistake (fat fingers).

This fat finger problem or in fact careless trading caused a Japanese bank trader kills himself. He traded a huge amount which was 10 times more than the amount that he wanted to trade. Unfortunately as it was for a big bank, there was enough amount of equity in the account and so the order could be placed. He killed himself before the others knew about his mistake because the market moved against the position he had taken.

Fortunately, with most of the trading platforms you don’t have to enter any number but you can still make other kinds of horrible mistakes with them. For example you don’t cancel a pending order - like a stop loss - when you have already closed your trade by yourself. The stop loss become triggered and takes a new position while you are not at the computer. If the price moves against the position, you will find out when you have lose a lot of money.

So don’t be a careless trader and always double check everything. Specially keep in your mind that you have to double check two things at the end of the day before you shot down your computer:

1. You should check your account balance and see if all of your equity is free or any part of it is involved in a trade. If there is any amount of money in any trade, it means you have not closed your positions properly and there is still some open positions. This can happen when you buy - for example - $50,000 but you sell $100,000 when you want to close the position. So you close a $50,000 long position but a new $50,000 short position will be opened.

2. Check the pending orders and close them.

Fundamentals: Tomorrow at 10:00 AM - Wholesale Inventories

1. Euro against US Dollar (EUR-USD)

2:30am GMT

It went down over 120 pips. Hope you could take the proper position.

Breaking the low price of the previous candlestick is always a good idea for taking a short position while you are at the middle of a trade and you are not already short. This is also true about taking a long position.

Usually when we have a big Bullish or Bearish candlestick, the new candlestick moves against the direction for a while and then keeps on moving to the same direction as the previous candlestick. So if you take the position when the new candlestick comes, it will move against you for a while and you may panic and close your trade and lose some money.

If you don’t like to panic, wait for the new candlestick to breaks the low price of the previous candle and then take a short position ( and visa versa for taking a long position).

Of course it is always possible that the price moves against you even after breaking the low price of the previous candle but it happens very rarely.

The daily shows that it went down nicely but it is right above the 161.80% level which is a very strong and important level. So be careful if you have a short position.

The 4hrs shows that the 23.60% is broken down but the price is retesting this level. I suggest you to close your short position if the price goes above the 26.60 level and then breaks the high price of the 7:00 Feb 16:00 candlestick (the small green line). If you don’t like to lose your profit, you can close your short position right now but I think it will keep on going down.

The one hour shows that it is making a consolidation above the 261.80% level but Bulls are not strong enough.

2. US Dollar against Swiss Franc (USD-CHF)

3:50am GMT

Today’s candlestick in the daily chart is a big Bullish candle with a long upper shadow. This candlestick is closed right under the 161.80%. We also have a resistance at the same point.

The 4hrs shows a strong sell signal. Go short if the prices breaks down the close price of the 7 Feb 16:00 candlestick (the small green line).

The same sell signal in the one hour chart:

3. British Pound against US Dollar (GBP-USD)

4:03am GMT

It broke down the 38.20% level strongly.

The 4hrs shows a buy signal. You can go long if the price breaks up the small red line.

The one hour shows that the price is testing the Bollinger middle band as a resistance.

4. US Dollar against Japanese Yen (USD-JPY)

4:24am GMT

So it broke up the triangle but it is under the resistance right now. The Bollinger bands have become so close to each other which means there is a very small amount of trading. The relatively long upper shadow that has broken up the Bollinger upper band says that it is possible that the price goes down to retest the broken triangle.

The 4hrs shows a very strong sell signal.

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