Forex Trading Review – Week 37

This was week was much better than my past few trading weeks.

I took 11 trades which is over double my average trade quantity. But they were all valid trades, so I can’t say that I over-traded this week.

I’m happy with my performance and this was a nice little confidence boost to remind me what it feels like to win some trades!

9th September – 13th September

Trade #177

Reflection:

Excerpt from last week’s journal:

I took one last trade for the week on AUD/JPY which is still playing out, so I won’t go into detail about that here except to post a screenshot of how the trade looks as of this weekend:

I don’t like its chances for a 2nd-target win next week because price is already pretty heavily over-extended on this timeframe, but you never know what might happen. That’s why I like to use trailing stops with this particular 1-Hour strategy.

This is a great example of why I choose to trade systematically instead of using discretion.

Price action was ugly when I entered this trade, but it met my objective trading rules so I had no choice but to enter it. I knew that no matter how much I didn’t like the look of it, it gave me a positive expectancy, and I’d be a fool not to act on that statistical advantage.

Sure enough, despite my concerns, this trade ended up being one of the biggest second-target winners all year. The market, although “over-bought” and over-extended to the upside, continued to the upside.

As Newton’s First Law of Motion states:

An object at rest stays at rest and an object in motion stays in motion with the same speed and in the same direction unless acted upon by an unbalanced force.

Newton

Until this market is acted upon by an unbalanced force (ie. sellers take out a key support level in this trending move), it is more likely to continue moving higher than not.

So don’t fight or question it – just jump on board and trail your stop loss! Easy peasy.

In this case, when price began testing a major resistance zone on the Daily chart, I trailed my stop loss using the 15-Minute chart. Eventually price retraced to take me out of the trade, and I’m ok with that.

It appears price is now consolidating, and whether or not it heads higher from here, I’m happy to have secured the majority of profits out of this large move.

Trade #178

Reflection:

Not much to say about this one.

Price was in a down-trend on this timeframe (obviously – lower lows and lower highs) – and also in a bearish trend reversal situation on the Daily chart.

So I went for this valid pullback setup, and I managed to catch a 1-target win out of this trend-continuation play before being stopped out for break-even on my second position during the retracement.

Trade #179

Reflection:

This was a cheeky trade. I entered late on the large engulfing candle that tested the 50-EMA (and previous resistance in trend which appeared to turn into support).

Because price had not closed far below the 50-EMA I decided to place a limit order on Sunday night to get into this trade on Monday morning.

As it turned out, that minor support level held and gave this market a pop which hit my first target, making this a winning trade.

Trade #180

Reflection:

This was really unfortunate. Price came within a pip or two of permitting me to roll my stop to break-even before rolling over to stop me out.

Luckily, I made an error on this trade and my position size was 40% smaller than it should have been. Therefore I only lost -0.60% on this trade instead of -1.00%.

I still count this as an error trade, because if this had been a winner, I would have been disappointed instead of happy that my position size was smaller than it should have been.

This position size error is a result of placing this trade on my mobile phone while I was out of the house. I used an app to help calculate my position size, but either I put in the wrong values somewhere or the calculator is inaccurate because my position size was not even close to accurate.

So I won’t be doing that again!

Trade #181

Reflection:

After being stopped out on the previous trade, price then made a new high and pulled back to give me another valid entry setup.

Unfortunately this trade was stopped out by a pip or two before rocketing on to make new highs again. So even though I got my directional bias right, my entry timing was off, and that’s the way the cookie crumbles.

According to my rules there’s nothing I could have done about this. My stop loss distance has been optimized to give me the best expected win rate for this strategy, so moving my stop any further away would jeopardize that long-term expectancy.

Trade #182

Reflection:

This was a typical momentum pullback trade.

Price was making higher highs and higher lows above the EMA and momentum was strong. So I went for this pullback setup and price rallied to hit my break-even target and then reversed to stop me out.

My rules were followed, so this was a Good Trade.

Trade #183

Reflection:

I had a lot of confidence in this setup.

At the time, the daily chart was creating a very convincing reversal pattern right at a major level of daily support (a pinbar engulfing candle).

But unfortunately this pattern failed, and price moved lower into the support zone before eventually giving me the reversal I was looking for.

So this just goes to show that no matter how much confidence you have in a setup, it might still lose, and that’s why we manage our risk.

Trade #184

Reflection:

This was another typical momentum pullback trade.

Price was clearly in an up-trend and has just blown through a very major daily resistance zone and found support in that zone.

So I had no reservations about entering this trade. But unfortunately, despite the strength of momentum, price retraced to stop me out on my second position before moving higher, making this a single-target winner.

Trade #185

Reflection:

These trades always sting.

Obviously this trade was always going to lose. There’s nothing I could have done differently about this trade to avoid the loss, and so I can’t feel bad about what happened.

But it always sucks to see your trade get stopped out for a loss while your directional bias remains correct, and then watch the market roll over in your favor without you.

This happens often in trading, and I’m pretty used to it by now. So I’m not bothered by the outcome, and this was still a Good Trade according to my rules.

The only way to avoid this is to have much wider stops, but that negatively affects my long-term expectancy with this strategy, so taking whipsaw losses like this is something I need to learn to accept as a quirk of my strategy.

Trade #186

Reflection:

This was a solid reversal setup.

After being stopped out on my intraday setup on this pair, a few days later I got a second opportunity to try to capture this bounce out of the daily support zone at 1.313.

The daily chart had just printed (closed) as a bullish engulfing candle in this zone, which was extra confirmation that this setup had a high probability of winning.

So I took the trade, and sure enough we had a nice little pop off the EMA which filled my first profit target. Then due to news and economic data volatility, price whipped me out of my second position for break-even.

No biggie, Good Trade.

Trade #187

Reflection:

This was a funky-looking setup, but given the fact that the Euro interest rate decision had sent this pair into a short-term bullish frenzy, I thought that it was possible that this move had room to continue a little bit higher into a blow-off top.

Instead, price just went sideways until the weekend market close, so I was stopped out for break-even on this trade and on the next trade, too.

Trade #188

Reflection:

I don’t think I’ve ever had a trade come so close to being stopped out without actually being stopped out. Price came within 0.4 pips of my stop loss price but did not trigger. It’s always nice when that happens!

It’s a great reminder to me that my broker is not hunting my stops. If they were, it would literally take nothing for them to push the market 0.1 more pips against my position and take my money. It’s also a great reminder that until that stop loss is triggered – ANYTHING CAN HAPPEN! The trade can still win. That’s why I never mess with open trades and I never adjust my stop loss.

This occurred around midnight my time, which is roughly an hour after the U.S. market open, so I guess liquidity was so strong at that time of day that the Oanda EUR/JPY spread was below 0.4 pips (which is rare for this pair – usually it’s above 0.5).

Anyway, I woke up early Saturday morning at around 5AM to check the trade and it was basically at break-even. I did not want to leave an intraday trade open over the weekend because if anything should happen to affect the markets (such as a Trump Tweet) the market could gap beyond my stop loss and cause more damage than this trade is worth.

So I exited the trade this morning for -7 pips and a -0.24% loss to avoid that from happening. It would have been nice to get out for a small profit or at least break-even, but to be honest, I didn’t want to lay in bed staring at my phone at 5AM on a Saturday waiting for a better exit price.

Even though I had to take a small loss, I feel a lot better about being flat over the weekend. I’d rather take a -0.24% loss because the trade took too long to play out than be greedy and leave the trade open over the weekend hoping to get lucky only to be slammed on Monday morning with an adverse price gap.

Edit from the following Monday 16/9/19:

This turned out to be a wise decision!

Weekly Reflection

Annual Return: +11.52% | Drawdown: -13.27%

Last Week’s Goal: Execute my plan flawlessly.

Overall Grade: A

I think this week went pretty well. I didn’t make any major mistakes other than a position sizing error which actually saved me from taking a larger loss, so that’s not the worst outcome.

I took a lot of trades and a lot of them were unfortunately stopped out by just a few pips which cost me a handful of extra winning trades.

In the end, despite my lack of luck on most of my trades, I finished the week with a +2% gain, and that’s better than nothing. We’ll have to wait and see if I can pick up momentum for the rest of the year.

I’m optimistic. I can already see the markets becoming more directional than the previous few months. I have a good feeling about the rest of the year, and if the markets continue to act this way for a while longer then I should be able to trade out of my drawdown within the next month or two.

Of course I have no idea what will happen and I could be completely wrong about that. That’s what makes this journal so interesting – I’m not hiding any of the struggles that I go through as a retail trader, and this is all live and uncut.

I could fall flat on my face, or I could end up with an impressive gain for the year.

There’s only one way to find out – and that’s for me to continue trading, and for you to check back next time. Good luck with your own trading, and I’ll speak with you soon!

Next Week’s Goal

Execute my plan flawlessly.

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