Forex Trading Review – Week 25

This week was pretty boring. I only took four trades: one lost, one broke even, and two were one target winners, making this a break-even trading week.

17th June – 21st June

Trade #107

Reflection:

This was a strong momentum trade. Price had just reacted off a major Daily level and I was anticipating a potential move back up to resistance.

Instead price barely filled my T1 then rolled over into bearish trend-continuation. In any case, I followed my rules, so this was a Good Trade.

Trade #108

Reflection:

This trade hurt. After the bearish reversal on the 1-Hour and 15-Minute timeframe following my previous Long trade, I decided to go Short here anticipating the Daily trend kicking back in.

Sure enough the Daily chart rolled over into trend-continuation to the downside, but not before stopping me out for break-even on this trade. Very unfortunate, but this is an occupational hazard of trading.

Throughout my backtesting I found that moving my stop to break-even after a 1:1 move on the 15-Minute timeframe saved my equity curve from severe drawdowns. Without that rule this strategy would not be as profitable as it is, and much more stressful to trade.

So it’s not a huge deal, nothing could be done about this in this particular instance. I just got unlucky. Still a Good Trade.

Trade #109

Reflection:

Even though the Daily chart is bearish on EUR/JPY, price had just reacted off a significant Daily structure support zone. So I was anticipating a follow-through on this breakout above the consolidation range just above that zone.

Instead we got a false-breakout and price reversed back into the range, stopping me out. This setup in particular is not fantastic, the RSI is overbought and price had just put in a bearish engulfing candle.

I have some more testing to do around these particular scenarios in order to find better filters to exclude these types of low-probability setups from my trading. I have some experimentation to do with the RSI as a filter, I think.

But as of my current trading plan rules, this trade met my requirements, so it was a Good Trade.

Trade #110

Reflection:

This was my final trade for the week.

EUR/USD had just reacted positively off of several significant technical support zones, including a daily structure zone, a daily bearish trendline, and a minor lower-timeframe support zone.

There was a zone of major daily resistance blocking my first target. Normally I don’t take trades like this because they tend to have a lower probability of winning.

However, because of the market’s reaction to the Fed’s interest rate decision and FOMC statement on Thursday, and because price action was consolidating right below this important resistance zone instead of reversing from it, I knew that this setup was different to the other setups.

This setup actually has a fairly high chance of success. I like to call it the Build-Up-Break-Out trade, although I haven’t written specific rules for identifying it yet. I am working on it and potentially going to turn it into its own strategy.

But basically, if price is holding above the EMA, making higher lows and higher highs as it comes into a resistance zone, and then after testing the resistance zone price does not lose momentum and reverse, but rather holds and consolidates. This can be a sign that the Smart Money traders with millions or billions of buying power at their disposal are pushing the market higher and accumulating at higher and higher prices.

I figure in this case that’s because the economic fundamentals had shifted slightly after the latest FOMC meeting’s decisions, and the Smart Money of the world decided that the Euro was now under-valued relative to the new economic outlook.

When that happens price tends to ignore technical levels and just blasts through them with ease. That is the scenario I envisioned unfolding here, and I happened to be right this time.

But regardless of the reasons why this move happened, this trade met my trading plan rules, so it was a Good Trade. I am still involved in this trade with my second position, so I will update you on how it plays out next week.

Weekly Reflection

Monthly Return: +0.88% | Annual Return: +23.78%

Last Week’s Goal: Execute my plan flawlessly.

Overall Grade: A

This week was pretty boring. I did not get many trading opportunities. But that has given me more time to focus on backtesting new strategies and improve the techniques I currently use.

So it’s all good, nothing to complain about. This is trading: hot weeks followed by cold weeks and small losing streaks. It’s the way of the game. The only thing to do is accept it, grow accustomed to it, and move forward regardless of the many challenges.

PS. I have started a YouTube channel where I elaborate on my trading process and how I employ technical and top-down analysis in order to identify trading opportunities throughout each week. Click here to check it out if you’re interested in learning more about my process.

Next Week’s Goal

Execute my plan flawlessly.

Previous Week’s Review
This Week’s Review
Myfxbook Stats

---