Q: I know I should be using a stop loss. Here is my mistake… I had a profitable position; I let the trade ride and then the pair changed direction while I was away from my computer, so now the open position is -80 pips. What trading advice would you recommend at this time to make the best of the bad position? Keep it open and wait or close it and take a loss? I am generally an active trader.
A: This is the biggest single mistake any new trader can make. First I can’t give specific financial recommendations, so you know your mistake; let’s figure this one out. For me here’s what I would do and maybe take this as a bit of “next time” advice. If you find yourself down, you want to do things quickly. First do a sweep of the market, by viewing 15, 60, 180 min interval charts and daily (short). See what is actually taking place in the market. I would want to know if I was trading with the trend or if simply in a retracement or quiet time in the market. If so, I would ride it out. If I was clearly with the trend, it should sort itself out. It may also be wise to set a stop below the last low or above the last high, depending on the trade direction. Lastly, I would see if any major economic data is due out relating to that pair.