Friday, August 15, 2014

AUDUSD - 15 August 2014 - Daytrade

It's days like this that make me a happy trader.

This trade was actually a loss. My flu cleared up alot tonight so I took the opportunity to trade the European / US overlap session on the AUDUSD. 

Price had been rising all week, so chances of a bearish reversal during Friday's NY session looked very good as intra-day and intra-week traders close their long positions before the weekend. 

(click to enlarge)

I was looking for a chance to short. When price broke a signficiant S/R level on the 5M chart, I looked for a retracement back to S/R and identified a HVLR (high volume low range) candle on the 1M chart. I went short on the break of the candle's low (marked purple).

Price didn't do much in the next few candles. It wasn't making any new highs so I sat tight. Then I noticed another HVLR candle form, just a bit beneath the previous four candles (marked yellow). Would it be sellers or buyers entering here? I wasn't sure, so kept the trade open. Price catapulted upwards a few candles later and hit my stop loss.

Price quickly fell afterwards to 0.93000 and hit my original profit target.

A few things about this trade. 

+ My stop loss was tight, giving me a reward of 3R, so my R:R was very good. 
+ There was no way that I could've predicted such a deep retracement. My tight stop loss got me out with little pain. 
+ Price generally behaved as I predicted (falling to 0.93000).
+ My profit target was good (just above 0.93000).

- I didn't know how to interpret the HVLR candle marked yellow on the 1M chart. When compared with the previous four candles, the candle would've indicated buyers moving in. However, in the context of the swing up (11 candles), it could also show sellers. In hindsight, it's easy to say to get out when unsure, but since my reward was 3R, I thought it would be best to sit tight and not spook myself out.

Overall, I liked this trade. It wasn't the result (which was bad), but the bits of knowledge that I gained.  

Thursday, August 14, 2014

AUDUSD - 11 August 2014 - Daytrade

I'm still down with the flu so have mostly stayed away from trading this week. I did take one trade on the 11th August during the Euro / NY overlap, which I've recorded below. 

Price had been moving down for most of the day so I looked for a retracement to a significant S/R level that I had identified on the 30M chart. Once price was within this S/R level, I zoomed in to the 1M chart for an entry signal and saw a HVLR (high volume, low range) candle (first candle marked purple). It was a good candle, forming a new high after another bullish candle, so I knew the rise in volume and contraction in range had to come from sellers. 

(click to enlarge)

I didn't immediately enter, though. I setted up a pending short on the break of the HVLR's low, which took about 7 candles on the 1M chart. Normally I would've cancelled the order if it hadn't been triggered after 5 candles, but the price action looked bearish as price on the 1M chart refused to make new highs. 

I exited manually when I saw a HVLR candle form in the opposite direction (second candle marked purple) for a reward of 1.2R or so. My original reward target was about 2.5R, which would've been hit if I had left it alone. So while I did walk away with profit this time, my continual "trade management" denied me the full potential of this trade. 

Friday, August 8, 2014

AUDUSD - 6 August 2014 - Daytrade

I haven't done much trading this week. I contracted the worst flu / cold I've ever experienced on Monday. I had a crushing migraine over Monday and Tuesday which was so severe that I had tunnel vision and couldn't even walk. It was crazy. News reports about the Ebola outbreak also messed my head as I slept and sweated out a fever.

Yesterday the headache subsided significantly and I took the opportunity to trade during the European / US overlap session. I had marked down significant S/R levels using the 30M chart and the AUDUSD had been rising throughout the day. When price retraced to the S/R level I marked here, I looked for an entry signal to go long.

I've been following the course at for some time now, and decided to use the 1M chart to identify my entry. I entered on the break of the purple candle marked on the 1M chart, which was a HVLR candle. It fitted within the purple candle marked on the 5M chart. 

(click to enlarge)

Something that YTC recommends is that you should manage your trade, which is what I did. This would be the third trade in the last week where I exited prematurely. Something to bear in mind is that as price moves towards your profit target, it will move against you at times. Anyway, I exited after a few bearish candles appeared and took a 0.5R loss before price rebounded and hit my profit target. 

You may notice that I've shaded the area around each S/R level with a maroon / dark red colour. I found this easier to trade S/R with. Support and resistance levels aren't lines, but zones. The zones I marked have a range of 4 pips, so once price moves within such a zone, I can start looking for entry signals. This takes the guesswork out of using S/R lines only. 

Some thoughts about the trade:

+ I waited patiently for the retracement and traded with the overall trend. 

+ the S/R levels I had marked behaved well enough.

+ my original profit target was spot-on.

- I could've chosen a better-located entry signal. If you look at the 1M chart, I had entered a HVLR candle that appeared after a bullish candle, towards the top. This would suggest that sellers are moving in, which is what actually happened when price fell in the next four candles. A better candle would be a HVLR candle that appears after a bearish candle, ideally at a new low. That way, there is little doubt that the new volume and range contraction is due to buyers. I marked the "better" HVLR candles in blue.

(click to enlarge)

Also note the tiny bearish candle in maroon / dark red. This was a really tiny candle with an extremely high volume. Price fell after this candle, so this HVLR candle indicated sellers moving in. Notice how it appeared after a bullish candle at a local high.

- I don't like mismanaging trades. With no hard rules, I'm moving my SL or exiting trades based largely on subjective interpretation and most likely my emotion as well. I place my SL at logical places, with the rationale that there will be pending orders that'll trigger in support of my trade before my SL gets hit. If I exit prematurely, I'm not giving those pending orders a chance to work. 

+ I like using the 1M chart to identify entries. Since I trade mainly via the 5M chart, looking for entries on the 1M chart not only multiplies entry opportunities by five, but it also allows me to get in earlier and risk less. 

I probably won't be trading tomorrow. I want to sleep in during the Asian session and shake this accursed flu off. 

Friday, August 1, 2014

AUDUSD - 1 August 2014 - Daytrade 1

Got my hands burnt trying to trade against NFP tonight. I traded what looked like the start of a range-bound period. The price action following NFP had become more bearish, and a lower swing high and a lower swing low had been established. Plus, downward momentum appeared stronger. I saw a high volume, low range candle at a S/R level and entered short using a limit order. My risk:reward was 1:2.25.

Looking back, a few things stood out:

- the high of the entry signal itself broke the previous swing high, which ruined my premise of a continuation of a bearish 'lower swing high, lower swing low' pattern. I didn't notice it until the trade was over. 
- while downward momentum was strong, there was massive stopping volume at 0.93000. The volume of the candle was double of the previous 10 candles or so, so there was massive buying interest. 
- the upward move following this stopping volume was stronger than the previous upmove.
- I was trading against the longer-term trend. This in itself isn't bad if you believe the market is entering a range-bound period, which I had expected. However, the NFP release would've introduced more volatility than usual.
- I didn't wait for the low of my entry signal to break, which would've provided more confirmation. Instead, I prematurely entered. Using a limit order after a break of the candle would've been better. As you can see, the low never got broken so I would've stayed out if I had followed this guideline.

Overall, a dumb trade. I was too quick and eager to pull the trigger. 

(click to enlarge)

AUDUSD - 1 August 2014 - Observations

There were no trades during the Asian session today. I spotted one setup but didn't take it. I'll post an observation about why I didn't trade it.

This looked like a viable setup when I first saw it (HVLR candle), but it just didn't tick all the boxes. Since I felt unsure, I decided to skip the setup (marked purple). 

The setup had formed at a tradable level, forming off 0.93000 (a round number) and off the Asian opening range. 

However, it had quite a few things going against it. I noticed that the move down was VERY STRONG compared to the upward move (compare the orange dotted line on the way up vs the way down). Plus the pullback was very deep (about 80%). There was also a significant S/R level above it. If the entry signal had formed above this S/R level, I probably would've taken it. But as it was, I wasn't 100% comfortable. 

Price continued falling shortly after.

(click to enlarge)

AUDUSD - 31 July 2014 - Daytrade 2

This is my second daytrade for today. I took this trade late in the European / US overlap session. I spotted a bearish HVLR (high volume, low range) candle rejecting off a significant S/R level (yesterday's low). Price action had also become bearish, with a lower swing low and lower swing high forming, indicating that the bullish trend since the NY open may be turning. After the HVLR candle broke, I entered using a limit order, which improved my risk:reward ratio to 1:1.5. 

Once price moved halfway towards my profit target, I moved my stop loss to breakeven, and got stopped out by the bullish pinbar that formed a few candles later. Price resumed moving downward shortly after. This is the second trade today where I've exited prematurely, despite being correct in price direction. Mildly annoyed.

(click to enlarge)