Some time ago we have been talking about entering the trades too early or too late. Well, now that we are talking about market environment, it is appropriate to talk about not getting out of the trade too soon. And that what leads us to the question how do we distinguish between retracements and trend reversal?
Trend reversal on the other hand is the overall shift of the price in the opposite direction from an existing trend.
- You can hold onto your position which could lead to losses in case a retracement turns out to be a reversal.
- You can close and re-enter on the trend establishment. But here you can also experience losses as there is the possibility of a rapid price movement.
- You can permanently close the deal and watch the graph go nuts. But in this case you are losing the possibility to earn at least some pips.