Trading Journal #23: The importance of setting positive SL

Important Notes:

• I update the zones of my tradingview charts every morning.
• I make daily zones (green boxes) and 1h zones (blue boxes).
• I am a scalp to day trader. I often look at the following timeframes: 15m, 1H, 4H, 1D.
• I only observe/trade one Forex pair: XAUUSD (Gold vs US Dollar).
• I journal both my losing and winning trades.
• I don’t claim myself as a guru. I am still working on refining my strategy. Thus, whatever you read here shouldn’t be taken as a piece of financial advice.

Note: A zone is a premium price area in which no one wants to give up the price. Zones usually serve as strong areas of support and resistance. Therefore, the price is expected to move from one zone to another.

In this journal, let me highlight the importance of setting a positive stop-loss. But first, let me show you the trade I entered two days ago:

XAUUSD on the daily timeframe

In my previous journal, I stated that I have a strong bias for shorting on XU. After setting a SELL order, this is what happened:

XAUUSD on 4H timeframe

The price broke down as expected but the selling pressure started losing before hitting my target price. What I did is I set a positive stop-loss to protect my gains should the price go up unexpectedly and at the same time to make some room for the price to breathe if the downtrend continues.

The price shoot up and hit my positive SL. If I didn't put such SL, I may have incurred huge losses instead. This is the importance of setting a positive SL. It allows you to protect your profits especially if you're already on the positive side and the price went against your bias before hitting your target price.

PS: The reasons why I am having this online journal can be found here:

Officially Documenting My Trading Journal Online