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You again reduce your stops to 50 pips each for the three lots (150/3=50). The pair EUR/USD continues to go high. It reaches 1.2480. You decide to disregard all the money management rules and remove the stop with the belief that this high rate for the pair EUR/USD is unsustainable. The pair is overbought and it will reverse soon. This will give you the time to cut your position when it does.

Whenever the market is faced with something it can’t do. It proceeds to do exactly that. Trying to out think the market is never a bright idea. This is because the traders just like you who have been caught on the wrong side of the market are all sitting on the same trade and are vulnerable.

The EUR/USD rate reaches 1.2550. You are in trouble now with an unrealized loss of 107+57+47=211 pips. This simple trade is now looking like it may very well take a large chunk out of your account.First practice on your forex demo account. Learn the forex charts.

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The stress level increases. You are tempted to simply stop the pain, get rid of it all and regroup. Stubborn traders may be tempted to double up and bet on a decline.

The pair EUR/USD does not want to reverse any longer and is set on going beyond 1.2550 level. Pride has no place in forex trading. The market proved you wrong and you need to move forward.

Currency rates have a tendency to make a move, consolidate then continue. The one thing that can save you during this bad time is that currency rates do not move straight up or down. This stair case pattern is evident in most financial instruments. It simply indicates the accumulation/distribution stages of a move.

You should consider these consolidation periods as your window of opportunity. Longs may take some profits and the shorts may get stopped out and both need time to set new positions.

You look for a dip and a consolidation period to free up part of your position. You get rid of one lot at 1.2553 taking a realized loss of 107 pips. Taking a loss hurts but we have now given ourselves more flexibility and more margin. Now you have two lots short.

Range is when the market is consolidating. You wait for a range to develop. This soon takes place as a rough 100 pips range develops and trades for several days. You realize that a range has developed. You actively start to trade it with the third lot that you had freed from the trade. Know range trading.

This technique proves effective. You are nimble enough with intra day trades to quickly pocket a good amount of pips to offset some of the loss that you have taken by removing all the stop losses.

This way you can reduce your loss. The currency prices can never go up and up and up. It will at one point pause and try to consolidate. You have taken advantage of this fact. Lesson is to reduce your total exposure and try to manage it instead! But sometimes it is always good cut and run. You be the judge of your decisions.

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