Saturday, April 30, 2016

Week in Review: 25 April to 1 May 2016

I ended the week slightly down. There was a big move on JPY pairs, and unfortunately I was on the wrong side. However, I mitigated my risk so it could've been worse. Without further ado...


There was a bullish engulfing candle on Friday 22 April. It looked like bears were getting trapped to me, so I went long during Monday's open, with a wide stop loss at the bottom of the engulfing candle. I'd set my reward at 0.67R, just below the next level of resistance. I normally don't aim for rewards less than 1R, but my backtest has shown that this signal is still profitable with a 0.67R reward.

Just prior to the Bank of Japan monetary statement on Thursday 28 April, I tightened my stop loss to just below the mid-week pinbar. Central banks can be your best friend or your worst enemy. If the BoJ was favourable to me, then price should shoot upwards without looking back. If the BoJ was unfavourable, my tightened stop loss would get me out quickly.

It just so happened that the Bank of Japan's statement was unfavourable (hawkish for the JPY) and I got stopped out within three minutes, literally. 

My original risk was 1.5%, but due to my tightened stop loss, I ended up losing 0.61%, or 0.4R. 

Profit: -0.4R


This was basically the same trade as the USDJPY. I spotted a low-volatility pinbar touching 125.500 and figured that if this level broke, then the EURJPY should shoot upwards. However, I knew that this trade would be highly correlated with the USDJPY, so I reduced my risk (or position size) to 0.5% for this trade.

While price did break through 125.500, the BoJ statement on 28 April reversed the breakout and hit my stop loss.

What's interesting is that price came within 4 pips of hitting my profit target just before the BoJ statement. There's a lesson here.

Profit: -1R


Lesson #1: Tightening the stop loss before a major news announcement can work if placed at a logical level (a good stop loss should give price enough space to "breath" for the first minute or two after a major news release, but also get you out quickly once the market has made its decision).

Lesson #2: Sometimes close enough is good enough. Price came within a few pips of my profit target on the EURJPY before the BoJ announcement. Basically I was risking my entire trade + the floating profit, just to win a few more pips if news came out in my favour. Closing the trade, tightening my stop loss, or moving my profit target upwards would've been better options (my preference would've been to close the trade and pocket the profit). 

Lesson #3: Reduce risk when there's a good chance of correlation with existing trades. 

Friday, April 22, 2016

Week in Review: 18 April to 24 April 2016

I hope everyone's enjoying their Friday! :)

This week has been relatively quiet. I only entered two trades, but both trades won, so I'm not complaining. 


This was an extremely good trade. I'd even say that is my best trade so far this year.

The USDCAD has been in a bearish trend for the last few months. During Monday, I thought that Friday's high would be a good place to go short with a sell limit entry, as this was a good spot for bears to re-enter the downward trend. 

Fortunately for me, the USDCAD opened above Friday's high, so my short got filled at a very good price. My profit target got hit later in the day. Quick and very profitable, just the way I like it. 

Profit: +2.5R


This was a pretty poor trade. While the setup was technically correct, resistance was very close to my entry. I reduced my risk to a very conservative 0.5% and tightened my reward to 0.5R. I ended up exiting at 0.2R and scratching the trade. Price was struggling to break upwards, and I didn't like the risk I was taking for a 0.5R reward, so I got out with a tiny profit. Looking back, I think I should've avoided this trade. However, I kept my risk very low (0.5% vs the usual 1%-2% that I usually trade). If you're speculating and don't feel confident, it's okay to stay out. If you MUST trade, then keep your risk low. 

Profit: +0.2R


I also just hit the 10% milestone for 2016. Next stop... 20%. :)

Myfxbook link

Sunday, April 17, 2016

Week in Review: 11 April to 17 April 2016

Last week has been pretty busy. I closed five trades, with mostly-positive results.


This is what I call an "after-weekend continuation". The bears have control of the GBPNZD, and many bears would've exited on Friday to limit their exposure over the weekend. A good place to re-enter would be Friday's high, which is where I went short. I took profit just above support, marked below.

Profit: +1.1R


I spotted a bearish engulfing candle at the close of Monday, and went short on Tuesday. This was a standard trade, and saw enough scope for a 1R reward before I'd hit support.

Profit: +1R


I had went short the previous week after seeing a bearish engulfing candle. I'd set my reward at 1R, and price came within 5 pips of hitting my target before reversing. Shorting the AUD is expensive, and I was losing about 1% of my profit for every day I held the trade open. Holding the trade overnight on Wednesday would've cost me 3% of my trade, since the overnight swap is usually tripled on Wednesdays to account for Saturday and Sunday. Rather than lose 3%, I decided to exit the trade with a tiny 0.2R reward.

Profit: +0.2R


I think I mismanaged this trade. I spotted a low volatility candle at the end of a retracement, and went short at the break of its low. Price did break downward for awhile, but then returned back to my entry point, so I decided to scratch the trade and got out at breakeven. If I had kept the trade open, I'd still be in it. 

Profit: 0R


I went long on the CADJPY after spotting a small, shallow retracement, and got stopped out the next day. The previous day's high behaved as resistance and stopped price from advancing upwards. 

Profit: -1R


Avoid shorting the AUD (and NZD). Holding overnight positions is just too expensive.