Charts can do this to us traders…

Or, more accurately, indicators can do this… Having just seen a nice march upwards, along the top Bollinger boundary, there’s a bit of a squeeze, and now the trend is into its third (Elliott?) wave. Everything worth consulting says go long, so it’s buy….

And this is what happened….

Instead, there’s a Bollinger bounce and then a fairly dramatic trip down. We thought the uptrend was going to continue a while longer.

Prices do not have obey indicators, there isn’t some sealed-in-blood pact between them, and there isn’t a set of indicators yet invented that’s 100%.

How you deal with these situations is make-or-break psychology for the forex trader. It’s gone wrong, maybe big-time wrong in terms of pips. Does this make you a bad trader? No, one trade doesn’t. It’s a case of learning the lesson – not thrusting it out of your mind, because that’s not understanding history and being condemned to repeat.

Having the illusion of certainty shattered every so often does no-one any harm…