You know that before taking a trade I like to do a complete analysis of both, the long term and the short term charts.
I do this to make sure that both, long and short term charts are pointing in the same direction, therefore the likelihood of my trade moving in the intended direction increases.
But there is another reason of why I like to do this…
I while back I was reading an article about Warren Buffet and how he thought about risk… He said something about risk that became part of the way I see the market right now:
“Risk comes from not knowing what you are doing”
You know something, he is dead right about it!
From that moment, I understood that it is very important to try to understand what the market is doing right now.
Once you understand what the market is doing right now, you also know what the market is likely to do, and having that information could be the difference between a profitable trader and a trader with negative results.
What do you think?
Anyways… here is why I think there is a possible 500 pip trade in the EURUSD.