CLOSED TRADE: USDCAD: BUY@Any Close Above 1.32470 (-37 pips)

Took a loss on this trade although it looked good for a little while. This is a good lesson on the dangers of trading a POTENTIAL harmonic pattern. Although many times, it can be quite profitable to trade the POTENTIAL completion of a harmonic pattern (i.e. trading the CD leg), it is also more risky than trading a COMPLETED pattern.

As I've said before, when trading the CD leg, you ARE NOT trading any pattern per se because the pattern doesn't actually exist yet. So for those that want to point out and say, "See? Advanced patterns don't work!", to you guys, I just want to point that out. And for those that want to trade advanced patterns, this is a good case example about the risks of trading on the CD leg completion. I do it. So do many others who trad advanced patterns. But as long as you know the risks involved and manage your stop losses well, it's a worthwhile risk.

Since one of the reasons I take the time to post my trades here on Tradingview is to hopefully help fellow traders in learning about trading, I will also breakdown some of my losses as well and not only keep showing my wins. I don't want ANYONE to get the idea that I only win! I don't. NOBODY does! But the trick is to manage the losses.

ANATOMY OF THIS TRADE LOSS

So in this case, I traded upon the CD leg BUT in reeality, it was much more of a structure trade than anything else. I set my BUY at any close above the B point line which is representative of a structure. Prices close above that B point and I took a BUY order @1.32585 (close of the first bar to close above the B point line). I then set my stop loss @1.32220 (the low of the small channel consolidation below the B point line). Prices then proceeded up along the CD leg as predicted and even closed above the PROPER B point line (the B point of the crab) which indicated a good probability that the pattern would complete. But remember, it is ONLY a probability and not a sure thing that it will complete! So at that point, the trade was looking very good and was in the "profit" (paper profit as until the trade is closed, it is not real profit) by +68 pips. But then it hit the minor sr structure level I had marked on the chart and started major reversal.

So this being an actual STRUCTURE trade and not so much a CD leg pattern trade, I should've closed the trade at that point but I did not because there was a close above the B point of the crab. So I ended up taking a loss on this trade of -37 pips when prices came all the way down and hit my stops.