The Young and the Restless - Temptation Could Get you Broke!
“I generally avoid temptation unless I can’t resist it.” Mae West.
Temptation is the desire to perform an action that one may enjoy immediately or in the short term but will probably later regret it for various reasons. Try to remember how many times you fell in the “trap” of temptation in your life. I know I did. Joey Adams (an American comedian) once said: “Do not worry about avoiding temptation. As you grow older it will avoid you.” It’s time to wake up. Stop dreaming of Double Bottom patterns.
How you can go Broke from Tempting into Double Bottom Patterns?
Did it ever happen to you to go for a “sure” trade based on a perfect technical pattern and nevertheless to lose your money in that trade? It happened to me, unfortunately, more than once. The latest “temptation” was a perfect double bottom pattern for the Aud/Chf pair. According to two of the most known educational websites for the Forex traders – as DailyFx or Investopedia - the characteristics for the double bottom pattern are: The double-bottom pattern is found at the bottom of a downward trend and is a clear signal that the preceding downward trend is weakening and that sellers are losing interest. Upon completion of this pattern, the trend is considered to be reversed, and security is expected to move higher.
As you can see in my chart, this Aud/Chf trade had everything: had a downward trend, the second attempt to go lower failed and the rate action reversed, the buyers managed to break the “neck” of the pattern and the sellers seemed to lose their interest. All these were suggesting a clear signal that the trend was reversing and was expected to move higher. How can you resist to such a “goodie”? If you don’t trade these signals then what? Yet, I lost money in that trade, but at the same time, in thousands of many other situations, tempted by the same pattern, I made money. So you see…the technical patterns are like women: you can’t live with them, can’t live without them. After this I can’t help myself from asking you: how many times was a woman your temptation? Did you have regrets about falling in her “trap”? As far as I’m concerned I can say that many times I wanted her to set a trap so that I can fall in it. You see, if the Forex pairs’ movement in the market would not create these patterns or signals, it would be hundred times more difficult to make money, trading.
Bottom Line – Temptation is Irresistible, Learn to Acknowledge it
Getting back to Joey Adams, I can say that he is so right: “as you grow older it will avoid you”. I can say that as you earn more experience in the Forex trading, it will be clear to you that such signals are fake and will keep you away from them. If only I had paid attention to the other signs of that trade, it would have been another winning trade for me, but hey, even an 80 years old man is “tempted” by a 20 years old female. How can you resist it?