The Way of Investment (No. 109)

The Path to Investing Mastery (Part109)

Daily Chart Trading Practical Guide

1.    
NZDUSD was stopped out
　In The Path to Investing Mastery (Part107),NZDUSD has been getting stronger, so I closed the position to cut losses. Since the lot size was0.01, the loss amount was about\500.
The figure below is the daily currency strength chart.

　NZDis rising with the steepest slope. Given this daily currency strength picture, there is no longer a reason to keep holdingNZDUSDshort. Holding on will only enlarge the loss. In the original scenario, the expectation was that “NZDUSDwould decline,” but with this scenario collapsed, it is wise to cut losses sooner to prevent further losses.

　FXbeginners, if you hold a short position, you may think, “will it drop someday?” or “I don’t want to cut losses,” and hesitate, leading to a situation where you end up praying or relying on luck. No matter how much you pray or rely on luck, the market will not move in your favor. Loss management is the most fundamental part of trading.