Category Archives: Forex Trade Record

A Trader’s Confession – 20121206

FUTURES & FOREX TRADING INVOLVES SUBSTANTIAL RISK OF LOSS. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

 

FOR QUESTIONS REGARDING TRADING SPECIFIC TERMINOLOGY, REFER TO THE “TRADING TERMS & GLOSSARY” SECTION OF THIS WEBSITE.

 

Forgive me Father for I have sinned.

Confession in the Catholic faith helps people to face their failings, which is the first step to recovery.

I returned to the trading desk two weeks ago for the first time since 2007, when I made the decision to join the US Marine Corps in service to my country. In those four years, I experienced remarkable growth as a person, a leader, and as a manager, which will undoubtedly pay dividends in business.

Unfortunately, these past two weeks have not been demonstrative of the cumulative lessons learned both as a trader prior to serving and as an officer in the Marine Corps. I’ve been too eager to get in the market, to stay in the market, and too willing to accept unnecessary risk for uncertain gain. The result of my ill-planned and executed trades the past few weeks has led to today’s culminating loss of 3.5% in a single day. The purpose of this post is to acknowledge and address the flaws of the past two weeks.

“A trader can do only four things in a market: win big, win little, lose little, and lose big. Small gains and losses will offset, leaving winning and losing big. Eliminate ‘lose big’ and a trader can only win big.” – Anonymous

In years past, a 3.5% loss would fall into the “small loss” category that would otherwise be offset by a small gain. However, now that I’m a professionally licensed Commodity Trading Advisor (CTA), registered with the National Futures Association (NFA), a manager of futures and forex, my monthly target is a mere 1%. In fact, consistent gains of just 1% per month would qualify my asset management service for consideration by funds of funds money managers. Steady performance with a good chunk of change under management (otherwise referred to as AUM or assets under management), will make for a successful career as an independent trader.

“Bulls make money. Bears make money. Pigs get slaughtered.”

Emotions of fear and greed rule the market. If you let them rule you, you will suffer a trader’s death.

The picture below is what I saw two days ago on the Daily chart of the cable (GBP.USD). As you can see, this is a multi-month long cup and handle formation which portends a sharp break to the upside.

 

Position 1

Entry Time: 20121203 22:37 EST
Pair: GBP/USD
L/S: Long
Formation: Handle breakout
Time Frame: Daily
Entry: 1.60995
Profit Target: 1.6300
Stop Loss: 1.6051, 48 pips, below lowest daily pivot point and daily moving averages
Exit Time: 20121206 12:22 EST
Take Profit: 1.6051, stopped at 48 pip loss
Percent Gain: -1.92%

But this is what happened…

You might notice two things. First, I held the position for multiple days even though I was bothered by what appeared to be a reversal candle on the daily chart. Most reversal candles appear at the top or bottom of a trend, with the final candle coming after at least three candles in the same direction. This candle formed after a single daily move up. Hence, I was concerned that I entered the trade at precisely the time when I should be going the other direction, but was frozen by both fear and greed. I counted five waves and a reversal candle on the daily. Even the 4hr chart showed an ominous drop in the near future. Rather than cutting my losses, I held and lowered the stop loss to an unreasonable level. Worse, I had numerous opportunities to get out at a profit and yet every time, greed won over and I held for greater gains. I went long on a breakout on a wave 5. That’s a big no-no.

My chance for getting out at a profit on that position passed over night. Had I set a take profit, I would have locked in gains of 20+ pips for nearly 1%. Today, I saw the pair trending down towards the daily moving average, but thought it could bounce back up. When it became clear that the pair had reversed, as I had feared could be in the cards, and wasn’t going to bounce, I entered into a bold, risky game. I doubled down on the bottom of a wave 5 on the 2 and 5 minute charts hoping that the pair would reverse just enough that I could get out at a small loss or break even. It worked. But instead of getting out, again I succumbed to greed and held. The pair eventually reversed minutes later, broke support and turned into a huge loss for a total of -3.5%.

The best and worst part about this trade is that it was wholly preventable. I recognized the pitfalls: a wave 5 reversal candle, a drill-down chart (4hr) portending an upcoming reversal, and yet I failed to act in both cases because I did not set a take profit prior to entering the trade. This last point, is critical because doing so enables you to plan using logic rather than reacting to emotions of fear and greed.

Lesson: Start with the end in mind. Know your exit strategy before you trade, then build it into the trade.

In 2007, before I started posting to this blog, my performance was lackluster at best. Publishing my performance for your review ingrained accountability into my psyche and forced better trade planning and reduced risk.

The Forex market can be challenging for many reasons, but especially because of the double edged sword of leverage, which is part of what attracted me to the market. By becoming NFA-registered and by passing my Series 3 & 34 examinations, I’ve committed to success. However, success requires discipline and discipline requires a plan.

Trading Plan (DRAFT)

  • Mission: Remove emotion from the conduct of trading in order to produce gains of 1% or better per month.
  • Components: Trend evaluation on Daily, 4hr, 1hr, 15 & 5 minute charts. PMLCOA (Pair’s Most Likely Course of Action), a summary of expected price action, will drive the entry and exit orders.

Price Target Test Trade

FUTURES & FOREX TRADING INVOLVES SUBSTANTIAL RISK OF LOSS. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.



FOR QUESTIONS REGARDING TRADING SPECIFIC TERMINOLOGY, REFER TO THE “TRADING TERMS & GLOSSARY” SECTION OF THIS WEBSITE.


Position 7

Entry Time: 11:17am EST
Pair: GBP/USD
L/S: Short
Formation: Break of S2 at 1.8536
Time Frame: All
Entry: 1.8533 (Entry upon close of 1 & 5 min candle at 1.8533.)
Profit Target: 1.8468, 65 pips, no trailing stop, testing profit stop at S3, stop loss at break even
Stop Loss: 1.8533, 0 pips – break even, 7 pips below S2 (3 pips below plus pip spread)
Exit Time: 11:41am
Take Profit: 1.8533, stopped at break even
Percent Gain: 0%

Trade Recap

Had I used a 15 pip trailing stop, I would have locked in 8 pips rather than winning none. Since this was the third break of a daily pivot point on the day, it would have been more prudent to take the trailing stop since the pair would seem likely to lose steam. Based on this, if we get a break south on the weekly support line of 1.8508 next week, I’ll target the next line of support rather than use a 15 pip trail simply because the move is bound to be significant. Otherwise, I’ll use the trailing stop to lock in gains.

GBP/USD Short at 1.8715

FUTURES & FOREX TRADING INVOLVES SUBSTANTIAL RISK OF LOSS. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

FOR QUESTIONS REGARDING TRADING SPECIFIC TERMINOLOGY, REFER TO THE “TRADING TERMS & GLOSSARY” SECTION OF THIS WEBSITE.

Position 1

Entry Time: 3:31am EST
Pair: GBP/USD
L/S: Short
Formation: Break of Daily Pivot at 1.8721
Time Frame: All
Entry: 1.8715 (Entry upon close of 1 & 5 min candle at 1.8715.)
Profit Target: 1.8755, 60 pips, 15 trailing stop
Stop Loss: 1.8726, 15 pips, 5 pips above daily pivot, moved to break even upon confirmation
Exit Time: 3:38am
Take Profit: 1.8685, +30 pips (trailing stopped)
Percent Gain: +11.8%

Position 2

Entry Time: 3:56am EST
Pair: GBP/USD
L/S: Long
Formation: Played the reversal candle, attempted to play the retracement/reversal
Time Frame: 5 min
Entry: 1.8690 (Entry at peak of reversal.)
Profit Target: 1.8721, 31 pips, 15 trailing stop
Stop Loss: None. Got out on completion of 5 min reversal candle in opposite direction at 1.8678
Exit Time: 3:59am
Take Profit: 1.8678, -12 pips
Percent Gain: -4.35%

Trade Recap

With the discovery of audible price alarms, I am able to set the platform to alert me when the pair moves to within trading range, which in this case, was just above the daily pivot. The alarm sounded at 3:30am, 30 minutes before I usually rise to check the chart, but definitely worth it. Trading the break made for a strong move and a safe trade.

In my usual manner however, I managed to give back 12 of the 30 pips in a subsequent and very unnecessary trade. Trying to time the retracement for greater gains is a difficult proposition, much more challenging than simply playing the break of a line of resistance like the daily pivot.

Overall, it was a good play: safe, effective and profitable. Simply not taking the 5 and 15 minute plays and waiting for a break either of resistance or pattern breakout will ensure more profitable plays as a result of providing enough room for my 15 pip trailing stop to activate.

Regarding a pattern breakout, before heading to bed last night, there were a series of reversal candles that indicated a 20 pip drop to the daily pivot. I could have taken that play and set the alarm for the daily pivot with a tight stop just above entry. Had I done that, my 30 pip initial trade would have been a 50 play since I would have been up to monitor the trade and watch it run through the pivot. (My trailing stop would have activated, but not have stopped me out of the trade.)

While sitting here typing up the trade record, a second line of support was broken, S1, and entered upon. See below:

Position 3

Entry Time: 4:30am EST
Pair: GBP/USD
L/S: Short
Formation: Break of S1 at 1.8649
Time Frame: All
Entry: 1.8639 (Entry upon close of 1 & 5 min candle at 1.8639.)
Profit Target: 1.8541, 98 pips, 15 trailing stop
Stop Loss: 1.8649, 15 pips, 5 pips above daily pivot, moved to break even upon confirmation
Exit Time: 4:38am
Take Profit: 1.8609, +30 pips (trailing stopped)
Percent Gain: +11.7%

Position 4

Entry Time: 4:51am EST
Pair: GBP/USD
L/S: Short
Formation: Poor Entry – No reversal candle, not near support or resistance
Time Frame: n/a
Entry: 1.8592
Profit Target: 1.8541, 51 pips, 15 trailing stop
Stop Loss: 1.8607, 7 pips, just above resistance on 5 min
Exit Time: 4:52am
Take Profit: 1.8608, -16 pips
Percent Gain: -5.2%

Position 5 – Sell Stop Experiment

Entry Time: 5:02am EST

Pair: GBP/USD

L/S: Short

Formation: Break of 5, 15, 30 min support at 1.890

Time Frame: 5, 15, 30 min

Entry: 1.8585

Profit Target: 1.8541, 44 pips, 15 trailing stop

Stop Loss: 1.8607, 22 pips, just above resistance on 5 min

Exit Time: 4:21am

Take Profit: 1.8609, -24 pips

Percent Gain: -8.3%

Position 6 – Chasing the Move

Entry Time: 6:02am EST

Pair: GBP/USD

L/S: Short

Formation: Chased the break at 1.8585
Time Frame: 5, 15, 30 min

Entry: 1.8565

Profit Target: 1.8541, 44 pips, 15 trailing stop

Stop Loss: 1.8607, 22 pips, just above resistance on 5 min

Exit Time: 6:28am

Take Profit: 1.8586, -21 pips

Percent Gain: -7.9%

Daily Recap

Based on the idea of capturing 25-30% of a move, placing a trailing stop equal to 33% of the target gain seems reasonable. In this case, that would have been a 35 pip trail. This move would have stopped out after a 35 pip retracement to what seems like it may be the very top of the retracement. In either case, as I write this, I recognized the absurdity of trying to put together a system that will be on target all the time. It just won’t happen that way. However, I can consistently hit 15-30 pip singles with a 15 pip trail on the break of key support or resistance on the daily pivots.

Positions 2, 4, 5 & 6 were secondary, unwarranted and ill-advised positions of which all turned out negative more than completely negating all of today’s gains on the responsible, safe breaks of daily pivot points. That works out to 2 gains and four losses with another tie (break even). Had I not been greedy and stuck to the plan, I would have captured 60 pips with zero against for a 25% gain. Instead, I have a 13 pip loss.

Today’s trading, had I not experimented and taken trades in the middle of pivot points, would have been hugely profitable. Instead, my experiments caused another albeit minor loss. The profitable trades were made possible as a result of analyzing the monthly, weekly, daily and 4 hour charts to get a bearing for general trend. After doing so, I waited for a break of key support lines according to daily pivot points. Entering upon the close of the 5 minute candle worked because there was a definite directional trend down. Without the directional trend, I probably would’ve been shaken out for a loss. To that end, assessing general trend before entry is key to setting targets and expectations.

The last experiment of the day was the use of a Sell Stop below support to act as early entry on expected confirmation. I can see how this can work for and against me. The Stop entry will provide a better price, but on those trades that do not confirm or reverse, well actually, my losses will be less too because on a short I’ll have entered higher so the stop will be tighter. So based on that logic, I should use a Sell Stop entry below support (or Buy Stop above resistance) and wait for the 5 minute confirmation. Move the stop loss to break even as soon as the trade has enough room to breathe and place the 15 pip trailing stop with the next pivot point as the profit target.

Position 5 was a test of the Sell Stop entry. Unfortunately, when trading in the middle of a trading range, i.e. not nearly one of the daily pivot points, it’s difficult to set a tight and accurate stop loss on which to increase the probability of a profitable trade. [STOP LOSSES MAY NOT NECESSARILY PREVENT LOSSES.] As a result, I took losses before gains materialized. So, we’ll use the Sell Stop entry around daily pivot points and breakouts, but none other.

Position 6 was placed to capture the gains lost from Position 5, not a good reason to place a trade. Moreover, a sell stop was not used leaving me with a worse entry by 20 pips and a larger than comfortable stop loss of 35 pips; proof that sell stops are effective at improving price for both gains and losses and further proof that it doesn’t pay to play in between pivot areas. [STOP LOSSES MAY NOT NECESSARILY PREVENT LOSSES.]

The only other experiment that I have in mind right now is targeting the take profit at the pivot points rather than using the trailing stop. Today’s first trade would have ran for 70 pips from the Pivot to S1 and closed with a Buy Stop (take profit stop) although the Buy Stop would have had to be placed slightly above S1 to increase the probability that the target would be hit. A Sell Stop entry below support would have opend a second trade, which would still be open at this point. This one could run 98 pips which the stop entry and close would target about 70 of the 98. Let’s see how they play out.

As of writing this paragraph at 6:37am, the latter position still would not have closed and appears to be reversing. We’ll have to check on this one later. The first one would have closed profitable because of that strong directional trend. Without that, a trailing stop is the better way to go.

GBP/USD Short at 1.9794

FUTURES & FOREX TRADING INVOLVES SUBSTANTIAL RISK OF LOSS. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.



FOR QUESTIONS REGARDING TRADING SPECIFIC TERMINOLOGY, REFER TO THE “TRADING TERMS & GLOSSARY” SECTION OF THIS WEBSITE.


Position 1

Entry Time: 4:17am EST
Pair: GBP/USD
L/S: Short
Formation: Break of Daily Pivot at 1.9797
Time Frame: 1 & 5 min
Entry: 1.9794 (Should’ve set limit entry on 1.9800.)
Profit Target: 1.9777, 17 pips
Stop Loss: 1.9809, 15 pips (5 min resistance plus pip spread)
Exit Time: 4:53am
Take Profit: 1.9811, -17 pips
Percent Gain: -8.7%

Trade Recap

Review of this trade shows that I entered a break of the daily pivot on a downward move of lighter volume. A breakout doesn’t occur on lighter volume. It may consolidate a bit before breaking out, which is what I thought was happening, but it also could reverse as a result of the move was losing steam, especially around a key support area like the daily pivot.

As it turns out, I entered at 1 pip shy of the reversal low or what would have otherwise been a perfect entry had I gone long instead of short. My entry did not include an inflection or reversal candle nor was it technically a breakout formation other than a break of key support at daily pivot.

I’m tempted to add an inflection or reversal candle to my entry criteria, but I now realize the challenge that I’m repeatedly running into: "perfect entry" versus "breakout entry". The "perfect entry", by definition here, means that I’d enter on the highest or lowest point of the retracement, but the problem is that point is ahead of the breakout which makes it challenging to choose a direction. I’ll have to give this some thought on how to resolve this issue.

What I do know is that my demo trading style worked. I played breakouts only and batted slightly better than .500. After going "live" I attempted to improve my trading strategy by adding in the strategy espoused by forex4noobs.com, trading off of key S&R levels. It makes sense to do so. It’s just that I’m so used to trading breakouts that I’m not as used to recognizing reversals. That’s where I need practice.

When Tigers pitchers struggle (which happens all too often), they get sent to the minors to work on their form. Perhaps I should have done this earlier, but I now feel the need to rebuild confidence. I’m demoting myself to the minors, aka back to the demo.

GBP/JPY Short at 213.63

FUTURES & FOREX TRADING INVOLVES SUBSTANTIAL RISK OF LOSS. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.



FOR QUESTIONS REGARDING TRADING SPECIFIC TERMINOLOGY, REFER TO THE “TRADING TERMS & GLOSSARY” SECTION OF THIS WEBSITE.


Position 1

Entry Time: 4:47am EST
Pair: GBP/JPY
L/S: Short
Formation: Reversal off daily pivot, break of 4 hour support at 213.69
Time Frame: All timeframes, entered on 5 min
Entry: 213.63 (Entered 6 pips south of 4 hour support on break.)
Profit Target: 212.85, 78 pips
Stop Loss: 214.24, 61 pips (Just above daily pivot.)
Exit Time: 9:04am
Take Profit: 214.29, -66 pips
Percent Gain: -28.65%

Trade Recap

I played this trade pretty well except I didn’t take profit on the reversal candle. I need to learn not to sit through large retracements, rather take profits and play the retracements or reenter the trade after the retracement is complete.

Basically, this one, after moving against me about $300, moved in my favor about $400 before reversing. I called the reversal and figured it would move up to the daily pivot before moving back down to the target of 212.85. Only problem is that’s a 4 hour target and not only do I need to be out of the market before then, I’d have to sit through or wait on much larger retracements as seen here.

Unfortunately, I didn’t even have that luxury as my position was closed due to a margin call because I had fully margined my account with another trade at the same time. Lots of lessons learned today!

GBP/USD Short at 1.9824

FUTURES & FOREX TRADING INVOLVES SUBSTANTIAL RISK OF LOSS. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.



FOR QUESTIONS REGARDING TRADING SPECIFIC TERMINOLOGY, REFER TO THE “TRADING TERMS & GLOSSARY” SECTION OF THIS WEBSITE.


Position 1

Entry Time: 4:37am EST
Pair: GBP/USD
L/S: Short
Formation: Reversal off 1.9835, 4 hour resistance
Time Frame: All timeframes
Entry: 1.9824 (Entered just south of 4 hour resistance and daily pivot.)
Profit Target: 1.9720, 104  pips
Stop Loss: 1.9854, 30 pips
Exit Time: 5:11am
Take Profit: 1.9843, -19 pips
Percent Gain: -8.9%

Trade Recap

The pair didn’t even reach my stop loss, but because my entry was 11 pips below 4 hour resistance, watching the price zoom past resistance was a bit unnerving. Only just as I was closing the position, did I realize that it stopped and retraced from the daily pivot which was just above 4 hour resistance. Had I held on, I would have watched the pair move in my favor 54 pips to 1.9779 before retracing to 1.9818 and moving back down towards the target. As of this writing, the pair is hovering at 1.9754, 80 pips from my entry.

USD/JPY Short at 107.85

FUTURES & FOREX TRADING INVOLVES SUBSTANTIAL RISK OF LOSS. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.



FOR QUESTIONS REGARDING TRADING SPECIFIC TERMINOLOGY, REFER TO THE “TRADING TERMS & GLOSSARY” SECTION OF THIS WEBSITE.


Position 1

Entry Time: 4:47am EST
Pair: USD/JPY
L/S: Short
Formation: Reversal off 108.27, 4 hour resistance, break of daily pivot at 107.88
Time Frame: All timeframes
Entry: 107.85 (Entered just south of the daily pivot.)
Profit Target: 107.50, 35  pips
Stop Loss: 107.97, 12 pips (Wasn’t set.)
Exit Time: 9:04am
Take Profit: 108.23, -38 pips
Percent Gain: -16.5%

Trade Recap

This was a good trade. I entered on the pivot break with an aggressive target, which was part of the problem on both trades. The pair moved in my direction after a retracement of the prior candle, however like on the GBP/JPY trade, I didn’t take profit on the reversal candle. Had I done so, I would have avoided all losses on both trades.

Oddly enough, although I took massive losses today, I don’t feel that badly. I know what I did wrong. Now I just need to simplify and codify my rules so the same mistakes don’t happen again. I was right about the moves as well as the retracements, I just didn’t take profit on the reversal candles, which I need to do.

GBP/USD Short at 1.9897

FUTURES & FOREX TRADING INVOLVES SUBSTANTIAL RISK OF LOSS. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.



FOR QUESTIONS REGARDING TRADING SPECIFIC TERMINOLOGY, REFER TO THE “TRADING TERMS & GLOSSARY” SECTION OF THIS WEBSITE.


Total Tally

Beginning Value: $3020
Current Value: $2128.48
Daily W/L: 3:4
Trade W/L: 13:15
Batting %: .464
RS: 256
RA: 322
Runs +/-: -66
Runs/Day: -9.4/day
Slugging %: 9.14
RPG: 19.69
RAA: 21.47
Total +/- %: -29.5%
YTD +/- %: -29.5%

Today’s Tally

Beginning Value: $2043.54
Ending Value: $2128.48
Trade W/L: 3:2
Batting % = .600
RS = 47
RA = 18
Runs +/- = +29
RPG = 15.67
RAA = 9
Daily +/- %: +4.16%

Position 1

Entry Time: 6:15am EST
Pair: GBP/USD
L/S: Short
Formation: Reversal off 4 hour Resistance at 1.9967
Time Frame: 5, 30 & 240 minutes
Entry: 1.9897 (Entered at inflection point with price action pointing down.)
Profit Target: 1.9879, 18 pips
Stop Loss: 1.9907, 10 pips (Not in the mood for a loss after fighting back from a down day.)
Exit Time: 6:32am
Take Profit: 1.9891, +6 pips
Percent Gain: +2.9%

Position 2

Entry Time: 6:44am EST
Pair: GBP/USD
L/S: Short
Formation: Reversal off 4 hour Resistance at 1.9915
Time Frame: 5, 30 & 240 minutes
Entry: 1.9909 (Entered upon appearance of reversal.)
Profit Target: 1.9879, 30 pips
Stop Loss: 1.9920 11 pips
Exit Time: 6:56am
Take Profit: 1.9905, +4 pips
Percent Gain: +2.0%

Trade Recap

Upward momentum had slowed as it approached the resistance line. Since the pair had bounced off the same line just a few hours earlier, it appeared to be a safe play after price action seemed to be reversing. After a reversal candle on the 5, I entered. In the next 5 minutes, I sitting comfortably in positive territory after a significant bounce from the line. My first quality entry of the day. It retraced and fell hard again eventually moving to the target.

I exited both trades too early as both eventually hit their targets before going anywhere near the stop loss. Basically, after going down so much this morning, I didn’t have the stomach to sit through a retracement or even an approach to my entry. It’s unfortunate because had I sat through them, I would have made 48 pips combined on the two trades rather than the 10 total.

GBP/USD Short at 1.9952

FUTURES & FOREX TRADING INVOLVES SUBSTANTIAL RISK OF LOSS. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.



FOR QUESTIONS REGARDING TRADING SPECIFIC TERMINOLOGY, REFER TO THE “TRADING TERMS & GLOSSARY” SECTION OF THIS WEBSITE.


Total Tally

Beginning Value: $3020
Current Value: $2409.79
Daily W/L: 2:3
Trade W/L: 9:10
Batting %: .474
RS: 192
RA: 248
Runs +/-: -56
Runs/Day: -11.2/day
Slugging %: 10.105
RPG: 21.3
RAA: 24.8
Total +/- %: -20.21%
YTD +/- %: -20.21%

Today’s Tally

Beginning Value: $2696.73
Ending Value: $2409.79
Trade W/L: 3:2
Batting % = .600
RS = 65
RA = 95
Runs +/- = -30
RPG = 21.67
RAA = 47.5
Daily +/- %: -10.64%

Position 1

Entry Time: 8:14am EST
Pair: GBP/USD
L/S: Short
Formation: Reversal at 1.9976
Time Frame: 5, 15 & 30 minutes
Entry: 1.9952 (Got in ahead of the move without much indication except knowledge of reversals in the pair.)
Profit Target: Scalping profits – just read the chart for slowed moves, then took profits.
Stop Loss: Entered on retracements knowing trend in my favor. Didn’t have SL.
Exit Time: 9:44am
Take Profit: 1.9932, +20 pips
Percent Gain: +11.36%

Position 2

Entry Time: 9:49am EST
Pair: GBP/USD
L/S: Short
Formation: Reversal at 1.9976
Time Frame: 5, 15 & 30 minutes
Entry: 1.9935 (Got in after seeing the retracement lose steam and trend restart.)
Profit Target: Scalping profits – just read the chart for slowed moves, then took profits.
Stop Loss: Entered on retracements knowing trend in my favor. Didn’t have SL.
Exit Time: 10:02am
Take Profit: 1.9915, +20 pips
Percent Gain: +11.36%

Position 3

Entry Time: 10:03am EST
Pair: GBP/USD
L/S: Short
Formation: Reversal at 1.9976
Time Frame: 5, 15 & 30 minutes
Entry: 1.9902 (Lost 10 pips on the reentry, but worked just the same.)
Profit Target: Scalping profits – just read the chart for slowed moves, then took profits.
Stop Loss: Entered on retracements knowing trend in my favor. Didn’t have SL.
Exit Time: 11:00am
Take Profit: 1.9877, +25 pips
Percent Gain: +14.2%

Trade Recap

After the miserable morning of trading, I happened to take my losses just as the GBP/USD reached its total daily move and started to reverse as is typical with this pair. Knowing that, I decided to trade the reversal back down. Had I simply stayed in the trade the whole time, I would have an additional 15 pips for $150, but after losing so much today, there was a psychological benefit to taking profits ahead of the retracement.

Also, before jumping into this trade, I read a bit of NickB’s ebook which mentions that he plays both breakouts and reversals. That surely will improve my performance. Also, reading about long wick reversal pattern candles helped time my entry as well. He knows what he’s talking about.

Overall, I finished the week up, but still down since trading live 2 weeks ago. Next week, I’ll continue to hit singles and be especially mindful not to swing for the fence purposefully or by mistake.

EUR/CAD Short at 1.5919

FUTURES & FOREX TRADING INVOLVES SUBSTANTIAL RISK OF LOSS. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.



FOR QUESTIONS REGARDING TRADING SPECIFIC TERMINOLOGY, REFER TO THE “TRADING TERMS & GLOSSARY” SECTION OF THIS WEBSITE.


Total Tally

Beginning Value: $3020
Current Value: $1759.79
Daily W/L: 2:3
Trade W/L: 6:10
Batting %: .375
RS: 127
RA: 248
Runs +/-: -121
Runs/Day: -24.2/day
Slugging %: 7.938
RPG: 21.17
RAA: 24.8
Total +/- %: -41.7%
YTD +/- %: -41.7%

Today’s Tally

Beginning Value: $2696.73
Ending Value: $1759.79
Trade W/L: 0:2
Batting % = .000
RS = 0
RA = 95
Runs +/- = -95
RPG = 0
RAA = 47.5
Daily +/- %: -34.74%

Position 1

Entry Time: 4:17am EST
Pair: EUR/CAD
L/S: Short
Formation: Rising Wedge Breakout at 1.5924
Time Frame: 15 & 30 minutes
Entry: 1.5919
Profit Target: 1.5905, 14 pips (Just above support at aggressive breakout range minus pip spread.)
Stop Loss: 1.5949, 30 pips
Exit Time: 6:53am
Take Profit: 1.5970, -51 pips (Stop loss not set. Resistance line not set. Didn’t have discipline to take the loss.)
Percent Gain: -18.65%

Position 2

Entry Time: 4:29am EST
Pair: EUR/CAD
L/S: Short
Formation: Rising Wedge Breakout at 1.5924
Time Frame: 15 & 30 minutes
Entry: 1.5926 (See comments below about entry and time frame reference.)
Profit Target: 1.5905, 21 pips
Stop Loss: 1.5949, 23 pips (Stop loss not set. Resistance line not set. Didn’t have discipline to take the loss.)
Exit Time: 6:53am
Take Profit: 1.5970, -44 pips
Percent Gain: -16.1%

Take profit is set at the beginning of the breakout range minus the pip spread.

Shortly after going all in on this pair, the GBP/JPY completed another pattern, consolidated and offered a buying opportunity. I much prefer that pair to EUR/CAD because it’s faster moving and has greater range. What I should have done is take my losses and switch pairs, but I didn’t. I held on with hopes of making this trade profitable, which it should still do, but not in the short time that it would have taken to recoup my gains with a switch to GBP/JPY.

Lesson: Don’t go all in on non-major pairs or hold off completely for a completed pattern on a major. (

Additionally, this was a poor entry. Rather than a small 15 pip scalp, I could have played a 40 pip move had I taken the time to look at the larger time frames, 30 & 60 minutes. Doing so would have revealed that although the pair broke out on the 5 & 15 minute charts, it had not yet on the 30 & 60 which means that it would first continue with the wedge pattern offering improved entry.

Lesson: Before jumping into a new breakout on a smaller time frame, consider larger time frames for a better entry point. (

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