Hello, dear traders.
I would like to ask some questions about classical reversal patterns.
First, I’ll shortly tell my story.
In December, 2006 my old friend called me by phone. I was glad to hear him and we agreed to meet in a cafe. In the cafe he told me that he is a trader on Forex. I was interested with his work and he invited me home to demonstrate his work.
I was surprised very much with his home. I haven’t seen him for 3 years and he was not too rich before, but now he is all right, lives in a very expensive house, has a beautiful car etc. I was really glad for him. In his trading room I was impressed with 2 powerful computers with 4 monitors and he explained that usually uses only one of them and the second is for better security – if one crashes, he can use the other one immediately.
He turned on the computer and told me only to look while he would try to explain everything. After that he easily earned $3000, impressing me a lot. After all, he presented me with 2
books about trading – J. Murphy’s "
Technical Analysis of the Finacial Markets" and B.Williams’ "Trading chaos".
Seeing such trading example I thought that trading is really easy and decided to try it too. My friend recommended me to try
demo account first. I’ve bought a computer, opened an account for $10000 but tried demo first as my friend said. I’ve read those books and liked them very much. After a month of practice I doubled my demo account and consider myself to be ready for the real account. My trading at the real account was quite good for the first time. I’ve got some profit and was pleased with my trading but I wanted more. Once I opened a position and added to it when the price went in my direction but the price immediately reverse and I was shocked with loss. Of course, I wanted to win the money back but I traded with fear of loss and lost again and again. I added $5000 to my account but lost them too in a week. My friend told me to stop trading and read the books again.
I tried to use reversal patterns in trading but often they disappointed me. Could anyone tell me what am I doing wrong, please? Here is the illustration of one of the patterns which I tried to use.
It’s a classical reversal pattern called “Head and Shoulders”, described in the book of John Murphy.
12th-October-2007, 11:52
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