Items Tagged With short

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.

There's a new forex article on Investopedia about trading your own trading style. 

Are you as patient as a fisherman or do you thrive the downhill thrills of finishing a snow boarding run?  Fisherman are trend traders and Snow Boarders are faders.  The point of this nonsense is that you have to trade to your style.  If you hate fishing, why trade like a fisherman.  The conclusion is:

Trade to your Taste

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.

Here's a post by Lloyd on his blog at http://tradingforaliving-assess.blogspot.com 

American trader and hypnotherapist Robert Krausz argues that 75% of trading depends on your psychology and claims that hypnosis can be used to control your emotional state to maximise your trading performance.

However, he stresses on the importance of having a trading plan at the first place!

Here are the 5 basic tasks necessary to become a winning trader and my personal takes:

1. Develop an analytical methodology
-- For myself, I read fundamental news and run technical analysis

2. Extract a trading plan from this methodology
-- I set up short-term swing trades (1-3 days), always try to pick good entry and exit prices

3. Formulate rules for this plan including money management
-- Take profits while ahead, find the best place to get out on bad trades, not relying on stop loss

4. Back-test the plan over a long period
-- Start trading small positions and allow mistakes

5. Finally, stick to the plan
-- Having confidence and keep practicing till perfect

I've been reading more about the Commitment of Traders Report and how knowing not only non-commercial positions but commercial as well can assist in longer term trades.  For those of you that don't know what the Commitment of Traders report is, let me tell you.

Some of this information was provided with assistance from Alexander Elder's book, "Entries and Exits"

First, the report is really the only way for private traders to get an idea of the volume for each currency pair.  Each week (Wednesday), the Commodity Futures Trading Commission releases the number of open positions, short positions and long positions in a given commodity.  These positions are given for 3 groups of traders, hedgers, big traders, and small traders.   "Savvy COT analysts compare current positions to historical norms and look for situations where hedgers, or the smart money (big traders) and small traders... are dead set against each other.  If one group is heavily short while the other is heavily long, which one would you like to join?  If you find that in a certain market the smart money is overwhelmingly on one side, while the small spec are mobbing the other, it is time to use technical analysis to look for entries on the side of the hedgers."

Currently, I only provide non-commercial positions or small traders.  You can read more about how to use just this information by going to http://www.forexproject.com/forex_volume

In the upcoming weeks, I am going to start providing data and graphs for all 3 groups of traders.  I just have to put my programming hat on and find the time to do it. 

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. 

The Australian dollar saw its biggest loss in three months on concern the nation’s high interest rates will soon fail to attract investors. Borrowing costs are climbing around the world. The currency lost 1.5 percent this week as interest rates in Australia stayed at 5.5 percent. The US Fed is expected to increase interest rates a few more times this year.

The Bank of Japan has indicated it might also soon start increasing rates. These developments are likely to keep the Australian dollar low for some more time. A report indicating increased employment had helped the currency earlier this week. But that trend has been short-lived.

After reaching a seven month low against the euro and the pound, the dollar is slowly limping up. The dollar had suffered a setback with the IMF commenting on the record U.S. trade deficit and the urgent need to correct global imbalances by letting the dollar fall.

Another blow came in the form of the Federal Reserve's signal to end a two-year campaign of raising short-term rates. The currency market which is sensitively linked to the Central Bank and the short-term rates naturally reacted dropping the dollar by another 2 percent. Though the damage is not yet over, the dollar is expected to pick up in a slow but steady manner.

According to Sharada Selvanathan, currency strategist at BNP Paribas in Singapore, " Any correction in the dollar is going to be very limited."

For further details Read

An observation from Learn::Forex that may pique your interest.

Euro/JPY has our attention…

Why? 

Notice on a Daily chart we are attempting to push up into the zone of 145.00 although the momentum is clearly beginning to fall off. This is again confirmed with the 120 minute chart as well. This combine with the resistance area we are looking for a short opportunity anywhere from current price up to a retest of the 144.80/145.00 zone. Targets on the short side are 143.00 and if we get a clear break of 143.00 we could have a second target of 142.00. We would look to place a stop up above the 145.00 level.