The trade was purely based on historical price points... important support & resistance levels
- the green & small blue line told us the importance of 210-214 levels
- targets of 228 / 236 were kept looking at longer time frame horizon
The upper resistance is around 243 highlighted by the red line. But rather looking at it as exact number, I look at it as zones / range. And at 236 it is at the lower end of the target range...
The trade had a profit potential of 7.5% in cash market with a risk of 4.3% - providing a decent Risk::Reward ratio
Now here's an interesting part. With our option strategy we converted the trade in to 5.5% reward potential (a little less profitable) but more importantly with full risk cover for a fall up to 210.50. How about that...!!!
The lesson is loud and clear. Do your home work. Study, Analyse & Keep patience. Do not think of get rich quick. Rather Focus on managing your risk first. And then look for profits.
Hope you find the lesson helpful.
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