When you plan and take your next trade, please ask yourself this question:
‘Do I know the Context of this trade?’
Knowing the Context of a trade is an important part of planning any trade. Knowing the Context means:
- Is this a Counter-Trend or Trend Trade and on which Time Frame?
- Is it a short term or longer term trade?
- How many reasons are there to take the trade?
- Is this a Lower Time Frame entry into a Higher Time Frame Setup?
- If so has the Higher Time Frame setup triggered yet?
Knowing the Context for your trade can give you a Bias and therefore an edge, but how do you do this in practice?
Recently we traded GBPUSD long based upon multiple time frame reasons and our bias was dictated by Weekly and Daily long setups, however, once triggered we then made the most of the long bias by adding on any pullback on the 4hr and 1hr time frames. If you get the overall Bias right then it makes trading so much easier.
Here are the Daily and 4hr charts showing the trades, as each new position was opened so all previous positions had to be at break even so our Risk at all times was a maximum of 1%. We have taken profit on all but 2 positions which we have left running at Break Even from 1.4640, we are now monitoring to see if any more upside can be generated in the run up or post the General Election outcome, either way it a successfull trade, where adding to the trade generated some extra profits.
You can also find a video of this trade here:
Top Trading Tip: Always spend some time planning every trade and try and nail the Context, if you can do this well then trading becomes much easier.