Items Tagged With pips

TRADE

Date: Tuesday, February 21st

Entry: Short USD/CHF at 1.3082

Reason for trade/setup: Using the 240-minute chart, there was the presence of a downward trend line above.  In addition, a momentum indicator that I created and am currently testing indicated a short opportunity.  Furthur confirmation was obtained from the 3-period, 5-period Price oscillator using EMA and the continued downward movement of the 8-period, 21-period Price oscillator.  Stochastic crossover and a decreasing rate of change since early February provided double-secret confirmation.

Initial Stop:  1.3121, the high of the entry day.

Initial Target:  1.3050 then 1.2950 which are horizontal support lines.

RESULT 

Exit: 1.3121

Reason for Exit:  Stop Loss triggered

Profit/loss:  -38 pips

Trade executed according to plan? yes

Outcome: After trade entry, the pair had remained close with the downward trend line.  Volatility was non-existent during Asian session.  The USD was bullish going into the European session and the pair went as high as 1.3153 stopping me out of the position between 3 am and 7 am.  This trade never moved in my favor by more than a couple of pips.

Thoughts:  All the indicators in the world can't predict the future.  I seemed to have multiple confirmation, felt great about the trade, yet it didn't turn out well.  I feel good about executing the trade though because I didn't go against my plan.  I saw a possible setup and pulled the trigger.  If I could do it all over again I would make the trade again but may have waited for an increase in volatility.  In addition, I probably set my profit targets too high considering the lack of price action this week.

UPDATE!!!  The pair has dropped another 70 pips since I exited.  That is why I am far from reaching my goal.

TRADE

Date: Tuesday, February 21st

Entry: Short USD/JPY at 118.78.

Reason for trade/setup: This trade was mostly based on the fact that resistance was up above at 119.00.  Furthur confirmation was obtained from the crossover of the Stochastic (9(3),3) from overbought territory. 

Initial Stop:  119.06, which was 6 pips above the high of the entry day.

Initial Target:  118.00 which is the top of the Ichimoku Kumo or cloud.

RESULT 

Exit: 118.35

Reason for Exit:  Profit taking.  I needed to get back on track this week.  I couldn't leave $1000 on the table

Profit/loss:  43 pips / $1070

Trade executed according to plan? no; early exit

Outcome: After trade entry, the pair played with the 119.00 resistance level for the entire U.S. trading session before finally finding more sellers than buyers at the Asian open.  The pair then stalled at 118.40 during lunchtime in Japan on Tuesday evening.  The pair retraced almost back to the 119.00 mark on Wednesday during the European session before heading back down.  There is solid resistance at 119.00.  I exited the trade before my target.  The main reason was for my need to get back some of my losses from the week.  I didn't want to leave $1000 on the table.

TRADE

Date: Friday, February 24th

Entry: Short USD/JPY at 117.05

Reason for trade/setup: With a downward trend in motion, I was looking for a swing trade to short the USD/JPY.  I was waiting for price to retrace back up where a minor Asian session breakdown occurred several hours prior at 117.10.  The DMI indicator was used as confirmation that the existing trend was still in place.

Initial Stop:  117.19; the high of previous bar

Initial Target:  116.40

RESULT 

Exit: 116.76

Reason for Exit:  End of day

Profit/loss:  +29 pips/ +$745.10 (3 lots)

Trade executed according to plan? yes

Outcome: This trade entry went exactly according to plan so much so that it surprised me.  The price didn't reach my limit and that didn't surprise me. 

Thoughts:  The market doesn't generate trades like this everyday and this setup would only apply to trending markets.

I've been trading the EUR/USD since yesterday evening and caught the breakdown below 1.1855.  The USD has not been able to push below 1.1827 though and until then the price may remain in a 60 pip channel.  

I'm up a little more than $400 to start the week in realized gains but as of now am only in a short EUR/USD position that I entered on a pullback last night.   There haven't been any major developments since the Asian trading session set most currency pairs in motion except for the USD/CAD which has broken down nearly 75 pips from yesterday evening.  I was actually long on a USD/CAD position yesterday and decided to get out after hearing that some favorable economic reports were expected from Canada this morning.  This demonstrates some good behavior on my part with an exit of the position with a $100 loss.  I didn't see the pair doing what I would have expected from my technical analysis and wasn't aware of the economic reports coming out of Canada when I entered the position.  What good would it have been to stay in the position?

Thanks to Forex2stay for the following comments.  Visit his blog at http://forex2stay.blogspot.com/

I do think it's possible, but I believe money mangement is the key. This needs to be a marathon not a sprint. One thing I've realized is that you can't use the same lot sizes for all of your trades. For example on one trade you might be risking 30 pips and another 20 pips. So if you trade 4 lots on both of them (standard account) you'd be risking $1,200 on one trade and $800 on the other. That's not good money management and it can get you a person in trouble.Here's what I do.....

When I position trade (4hr and daily charts), I won't trade unless I have a 2:1 risk reward ratio. I figure out the proper stop loss for my trade, based on TA. So for this example say that's 40 pips. I then make sure based on TA that I'm comfortable getting at least 80 - 120 pips profit. Once i'm comfortable I put my information into the following formula.

S=(E*R) / (P-X)

S = Size of Trade
E = Account size (Cash)
R = Maximum Risk percentage per trade
P = entry price on the trade
X = pre-determined stop loss or exit price

So let's put in some numbers.....

My account size $10, 000
Entry price on EUR/USD 1.2600
Currently I'll risk 3% of my account on a trade
My pre-determined SL is 1.2560

So how many shares of EUR can we buy with our money management rules??

S=($10,000 * 3%) / (1.2600 - 1.2560)
S = $300 / .40
S= 75,000

Anyway this is the way I do it. I hope it helps...

Forex2stay

Keep An Eye On Momentum

http://www.investopedia.com/articles/forex/05/MomentumMACD.asp

This article states the obvious yet brings up a simple setup that I never thought about.  The basic premise is that momentum precedes price.  Any momentum indicator can be used but this article uses MACD as an example.

1.    Define a MACD segment.  Segment #1 below.

2.    Measure the highest bar of segment #1.  In the above case, the highest bar was .004.

3.    Wait until the next segment forms; segment #2 above.  If a bar from segment #2 falls below -.004, downward momentum has exceeded previous upward momentum.
Segment #2 consists of 10 bars.  The values are in order from left to right (-.001, -.004, -.006, -.007, -.008, -.008, -.008, -.006, -.002, -.0008)

The third bar from the left is -.006, showing greater momentum than during anytime in segment #1. Sell at the close of this bar (price=1.7579.)  Exit the position at your discretion but a good time to do so might be when momentum slows.  Momentum stalls 2 consecutive bars at bar #7.  MACD value is -.008.  Exit at the close of this bar (price=1.7381)

The profit is close to 200 pips.  Like every other setup, this will not always be successful and should be used in conjunction with other confirmation tools. 

What I like most about this setup is its simplicity.

My profit so far this week is $883.  I have felt very comfortable with the flow of the market and when I look at the charts, everything just seems to make sense.  A big reason for this is because of my reluctance to trade a fade or go against the trend.  My trades have been with the trend therefore I've been trading the faster time frames.  It's amazing how much easier a trade can start in your favor by simply trading with the trend.   Even so, my week has not gone without mistakes.

My biggest mistake is exiting positions too early.   I had a short position in the USD/JPY open overnight and through the GDP announcement this morning.  Shortly thereafter, I closed it out for a slight profit.  Afterwards, the pair declined over 40 pips.  The trade was going just fine before I decided to micro-manage it.  I must try to curb this bad habit. 

More Booker Today:

The pair closed above the channel top.  I am very bullish on this pair right now.  The channel is about 500 pips wide, and that means that I am looking for a move above the channel of 500 pips, give or take 50.  The pair broke above the channel at 205.20-30 or so, and that means we are targeting 210.00 for the profit target.

I took the first part of this trade with a small lot size (a fraction of my regular trade size) so that I could safely place my stop back inside the channel at 203.60.  This means that I have plenty of room for the pair to bounce around.

This trade is not risk free!  Even though it seems to be on a trip upward, we could see a sudden reversal in this pair.  Do not ever risk a substantial portion of your account on 1 trade or set of trades.  Make sure you limit your risk on wide stopped trades by reducing your trade size.