Friday, October 24, 2014

AUDUSD - 24 October 2014 - Daytrade #1

I'm very much alive and kicking. I took a month off live trading after entering some drawdown. I then eased myself back in during Sept / October,  reviewing and designing new mechanical systems, but at this stage I'm very sceptical about pure mechanical trading. 

This was a trade I took some minutes ago on the AUDUSD just before the Tokyo open. Price is still ranging within the S/R boundaries of the overnight session. I went short at resistance after spotting bears moving in on the 1M chart. When price moved to 1R, I moved my stop loss to a little over breakeven to cover transaction costs. Price rebounded upwards from 1R and took out my stop loss, so I exited at a very tiny profit. 

While I was trading, I was mindful of a big, high-volume bullish candle that had occurred a short while ago. It could be evidence of a future bullish breakout since the reaction off support was very strong and quick.

I'm still using a combo of a 5M and 1M timeframe. The 5M is used to identify overall price movement and mark S/R levels. The 1M timeframe is used to identify an entry point as soon as possible. All I'm looking for at this stage is some sort evidence of strength in the direction I want to trade (usually some sort of engulfing candle). I'm also trying to stick with limit orders to minimise slippage. 

I've also added a chart at the bottom showing the ASX200 for the AUDUSD, and the Nikkei 225 for the USDJPY, since there is some correlation between stock indexes and currencies. It's not a trading method, but just something to be mindful of. 

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