Forex Trading Review – Week 23

Another solid but uneventful trading week.

I didn’t make any money, but I kept my equity curve in check and I’m only down around 1.4% for the month which is fine and a pretty standard drawdown for my strategy. In fact it’s likely to get a little worse before it gets any better, but that’s expected and ok.

You can’t win every trade, and as you’ve seen if you’ve been following this journal, I’ve gotten very used to losing trades.

So now it’s just a matter of continuing to execute the best setups I can the same way I always do, stay focused on detecting patterns in my trading that require attention, and bide my time waiting for the next streak of high-reward trading opportunities to come along.

3rd June – 7th June

Trade #95

Reflection:

I don’t normally take trades on Mondays anymore, especially on EUR/JPY, because statistically my trading does not tend to do well on Mondays for whatever reason.

I have a lot of theories, but until I work out what to do about it, I just decided to pull the plug on my Monday trading and not take any trades until Tuesday. That has seemed to be working very well for me.

But I did make an exception in my trading plan rules for situations like this.

First of all, AUD/JPY performs about average on Mondays according to my historical backtesting which gives me no reason to suspect that this particular trade had a high chance of losing. Second of all, this setup had a lot of higher timeframe confluence and the stop loss placement was good, resting behind a significant support zone that was likely to act as resistance.

This is what the daily chart looked like at the time:

So on Monday morning I placed a limit order at the close of the signal candle and waited to see if price either moved past my targets (in which case I’d remove the limit order) or retraced to fill me, in which case I could treat the trade as if I’d been in it from the beginning.

But then on Tuesday the RBA dropped Australian interest rates and the market interpreted that as bullish for the Australian dollar and AUD/JPY reversed on a dime.

We formed bullish divergence on the RSI, and then had a nice pop out of AUD/JPY that stopped me out. No big deal. It was worth the shot, and I was confident in the technicals.

Sometimes the fundamentals will break good technical setups, and that’s just part of the game.

The daily trend is still bearish and the bullish price action after the interest rate decision has been pitiful really, so I don’t think that this market will head much higher from here.

There’s very little news next week so I suspect price will either consolidate or respect the daily technicals and make a move lower. I am expecting trend-continuation or at least a re-test of the recent lows next week, but we’ll see.

Trade #96

Reflection:

Not much to say about this trade, you can see what I was looking at from the drawings on the chart.

This was a bit of a chop fest but I was seeing a bullish trending move forming on this timeframe after a significant bounce off daily support. I figured this valid pullback trade would make a good hedge against my AUD/JPY trade which was moving against me at this stage.

Price did indeed move higher eventually, making the equal measured move I expected, but not before stopping me out for break-even. No big deal, I followed my plan. Good trade.

Trade #97

Reflection:

Similar to EUR/JPY, this pair had just had a major bounce out of a significant support zone.

Price was making higher lows and higher highs on this timeframe, above the 50-EMA, and I got a pullback trade into previous resistance with a bullish trend-line forming, leading me to think we may see some kind of consolidation pattern develop before a break higher.

Unfortunately we formed an ascending wedge pattern instead and broke to the downside instead, making this a losing trade.

Trade #98

Reflection:

Well, this sucked.

Valid potential reversal pullback setup here. Price had a huge rejection from daily resistance after testing it with a wick, then rolled over to break and close below previous support in this trending move, leading me to believe we could see a poke lower and even potentially a reversal down to support (in blue).

But someone at the ECB must have said something during the ECB press conference later that night that sent this pair loopy.

I was eating dinner when my first target was hit unexpectedly. Last I’d checked price was nowhere near my target. Then, by the time I got up from the table and walked to my office to roll my stop loss to break even, the second position was stopped out for a loss.

So this turned out to be a break even trade instead of a one target winner, which sucks, but it’s a rare problem that occurs from time to time. When I get around to it I plan on creating an automated trade management system using Java or Python and Oanda’s fxTrade API so that I can automate my stop-loss-to-break-even rule when I’m not around the computer.

But that’s a big project that will take up a lot of time and I have other priorities at the moment. It’s on my todo list, and I’d love to give it a crack, so someday I’ll get it done.

Trade #99

Reflection:

A great trade to end the week. My 29th birthday was on the 7th, and I took this trade right before I left my house for the weekend to visit friends and family.

I was actually still bullish on this pair right up until price failed to hold above resistance at 1.35 and then broke and closed below the 50-EMA on the Daily chart. That sharp reversal alarmed me, and I immediately began to loosen up my Bullish bias and consider that this may now be a short.

So when I got this valid albeit shallow pullback setup, given the significant bearish price action preceding it and the fact that there was no support for 50 or 60 pips, I went for it.

While I was out at dinner my first target was hit and I was able to roll my stop to break even and forget about the markets for the rest of the night.

A few weeks ago I broke my rules using my mobile phone and I implemented a new rule: that I cannot make trading decision using the Oanda trading app. I must use my computer to make significant trading decisions.

But rolling my stop loss to break even takes all of five seconds and I can do it anywhere, which is one of my favorite things about trading. Although I can’t (or don’t want to because it’s uncomfortable) sit on a beach with my phone or my laptop taking day trades like those idiots on Instagram pretend to do, I can manage open positions like this.

That is what makes trading the best job in the world. I’d never take a trade while I’m out on the town drinking with my mates, but I can still do my job of protecting open positions when my alerts and limit orders are hit. Even on my night off for my birthday I was still able to stress-free and effortlessly perform my job as a trader.

Anyway, I digress. As for the trade – I was surprised by the magnitude of the drop and it wasn’t until today that I discovered that the dismal U.S. jobs numbers were the cause. Combined with the extremely lucky-for-me fact that CAD jobs were a positive surprise, USD/CAD dropped like a stone.

It was a great unexpected birthday present from the markets. I was spared a losing trade by 0.7 pips and now I’ve already locked in a 2.63R profit on my second position.

Because we are testing a significant Daily support zone after an extremely impulsive move down, leaving a lot of room for a deep bullish retracement/pullback, I will be watching closely for exit reasons early next week.

If I get a double-bottom or a higher-high higher-close I will consider exiting my second position where price is now. We’ll see what happens, either way I have trailed my stop and locked in profit and that puts me in my favorite position – a risk-free trade with uncapped reward potential.

Weekly Reflection

Monthly Return: -1.44% | Annual Return: +20.93%

Last Week’s Goal: Execute my plan flawlessly. Don’t over-trade.

Overall Grade: A

Another solid trading week. Nothing exciting, I didn’t make any money, but I didn’t lose much either, and that’s the two-steps-forward one-step-backwards game we play.

As long as I keep following my plan and the markets keep exhibiting the same historical chart patterns that I have tested and found to be profitable, then I have nothing to worry about and nothing else to do except keep on keeping on excecuting.

So until next week, that’s all folks. Thanks for stopping by and huge thanks if you read all of this. I hope it is helpful for you in your own trading journey, and if you have any questions or suggestions I’d love to read them in the comments section below.

Or contact me on TradingView by clicking here.

Good luck with your trading, speak soon.

Next Week’s Goal

Execute my plan flawlessly. Don’t over-trade.

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