Trading the Same Price Level More than Once
May 28, 2013
Finding a price level that continuously holds over and over again can be very profitable. It comes up fairly rarely, but occasionally you will find a level in the market that holds every time and tends to consolidate along that price level for extended periods of time yet never quite breaks through it. But when I do find one of these, they usually tend to be among the most profitable since a trade can be taken on each touch of the level, leading to a higher volume of (potentially) winning trades.
On the EUR/USD today (May 27), I took six put options within roughly half an hour (all denoted with red arrows in the image below) – starting with the 3:50AM candle – winning five out of the six. At this point, although we were in a general uptrend for the morning, three of the past four candles were bearish. This suggested to me that we were probably going to undergo a period of consolidation or even a retracement back down to previous levels in the market. I actually expected the pair to retrace back down to the previous minor resistance level of 1.2937 before likely heading back up again to maybe challenge 1.3000. But it simply consolidated for a long period of time before getting back down to 1.2937 several hours later.
After my first put option, I decided to take another on the very next candle given that the 3:50 candle showed a strong rejection of 1.2943. The 3:55 candle showed more bearish rejection so I decided to take another trade on the 4:00 candle again at the touch of 1.2943. The 4:05 candle didn’t quite make it up that price level so I did not take a trade, but given that I was taking 10-minute expiries on these trades I was already 3/3 on the day. The 4:10 candle touched 1.2943 again and I took another put option, producing another winner. I did the same on the next candle, and although this trade ended up being a one-pip loser I took another trade on the 4:20 candle, which won and gave me a 5/6 day.
I decided not to trade 1.2943 after that point. Price was mainly sticking above 1.2942 and not dipping down any further so I felt that the EUR/USD still had some upward bias and was bound to break out of this consolidation pattern at any time. My judgment seemed to be validated on the 4:30 candle, although this turned out to be a false break and 1.2943 continued to hold over and over again. But since I was wary of the pair finally making a genuine breach of 1.2943 I decided to simply exercise patience and watch only. However, if I had decided to take further put options at the 1.2943 level I would have won another eight consecutive trades just on that price level alone.
It would have been a very nice haul for the day to have over a dozen winning trades with minimal losses, but staying disciplined and trusting your judgment is always better than simply trading to trade. Always remember that it’s imperative not to trade just because you are bored sitting at your computer and you’re eager to make money. Trading out of boredom can be just as harmful as trading by emotion. Both will only lead to lost capital. Some days you might have five or more sound trading opportunities on a given currency pair; and some days you may very not have any. I have gone days where I simply don’t make a trade if I’m not comfortable taking any. You should never have the feeling that you absolutely NEED to trade. Going 0/0 on the day could reasonably be considered a good trading day in and of itself, as maintaining self-discipline and sticking to only the best binary trading opportunities available to you is essential in order to become a consistently successful trader.