Trading the weekly charts is an interesting thing.
When trading on a weekly time-frame, the foundation is having patience, getting a position on the right side of the trend, and letting it ride the trend as long as possible.
The problem we face with weekly charts is that, before we realize the trend might be turning, the currency pair has already retraced 500 pips… And no one wants to lose 500 pips.
But the truth is that trading the weeklys should be like trading a daily, 4 hour or hourly trend. We should be able to withstand a few bars in the other direction, and keep our eyes on the long term prize. But I think that because of the massive pip movement in a single weekly bar, we get scared out of our long term positions too easily.
The truth about trading weekly charts is that they offer insane movement, but you have to hold on to the trade long enough to let it accomplish that movement, and it doesn’t seem that most traders do.. because it is hard.
So often times what I see traders do is over analyze the weekly because they don’t want to “miss out” on movement, or they want to get in on the trend as early as possible. Every single bar represents a new zone or a new momentum in a direction and there charts end up looking like this:
And then looking at that, you have no idea where to go.
Every line represents a different option for how to trade it, and each one is telling a different story than the one before it.
If you wan to trade these type of charts, where you are holding a trade for months, you simply can’t pay attention to all the noise. The only thing you can do is follow the momentum of the chart and then take profit when appropriate.
Remember, the only reason to be trading weeklys in the first place is the long term pip gains, so why over-analyze all the noise and get yourself out of the trade every time it looks like it may turn?
Doing that, you will never hit the monster trade.
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- Using Multiple Trendlines to Identify Better Trades - February 15, 2018
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