I am a macro trader that uses technicals for entries and exits. However, I wanted to share with you one of the downsides of macro trading namely that once you have a firm bias on a currency pair any moves lower in price is just better value.
So take the NZDJPY pair recently. The RBNZ are on a rate hiking path expecting to increases rates up to 2.6% by December 2023 according to their last communication. The BoJ are expected to keep rates as they are for the foreseeable future. There is a key bias for NZDJPY upside medium term
This is all well and good, but say you enter at 80.00 then price drops to 78.00 what do you do? Hold? You have the bias so, yes, Then price falls to 76.00 (on overdone omicron variant fears for example ;-)). Hang on this is better value now , do I add to longs? You see the problem, the greater the price moves against you the better the value.
So, how do you handle this. Well you must do three things.
1. Never over leverage
2. Always decide where you will pull the plug on the trade and stick to that.
3 Where you can find very key technical levels to get that risk as low as possible.
Do these three things and it's not so bad. Over leverage and you will quickly find yourself in a world of trouble though, so avoid that pitfall.