Saturday, May 28, 2016

Week in Review: 23 May to 29 May 2016

I had a good run this week, two winners and one very small loss. I also have another trade currently open. 


I went short during the previous week, after seeing a reversal pattern. This was a standard trade, and I got out at 1R on Monday. My profit target was almost perfect, as price reversed back up afterwards. The AUDNZD may still fall further, but I'm going to sit it out until I see another bearish signal.

Profit: +1R


I went long at the previous week's Friday low. I've found that Friday's highs and lows are good re-entry points, as this is where many other traders will re-enter after closing their trades for the weekend. I managed to hit my profit target the next day, just below the swing high.

Profit: 1.1R


This trade didn't quite work out. I saw a low volatility retracement, and went short at the break of its low. Price then ranged for the next two days, coming very close to hitting my stop loss twice. By Friday night, I saw that price wasn't going anywhere, and decided to exit before the weekend at a -0.1R loss. Price action on the EURJPY looked very choppy, so when I saw the opportunity to get out at near-breakeven before the weekend, I took it.


I have another trade that's still open (short EURNZD). I left it open since its about 100 pips away from my stop loss, so it has enough room to cater for any weekend gaps or widened spreads.

Sunday, May 22, 2016

Week in Review: 16 May to 22 May 2016

I finished this week at a slight loss. I lost one trade, and won another.


I opened this short the previous week, just after the BOE released its monetary statement. I saw no real reason for the GBP to rise, and a bearish setup that I'd identified earlier was still valid, so I went short. Price fell halfway towards my profit target before reversing and stopping me out. 

Profit: -1R


This was an "after-weekend continuation" setup. On Monday, I went short at the previous week's Friday high. Price came within 4 pips of my profit target before reversing, and I decided to take profit at 0.4R. I didn't manage this trade well, and I think my emotions got the better of me (my trade would still be open if I had left it).

One thing I noticed was that the overnight swap was very expensive. After leaving the trade open for four days, the overnight swap had cost me over 5% of my position size. New rule: avoid shorting X/CHF pairs.

Profit: +0.4R


Be more mindful of negative overnight swap as it can consume your edge. Conversely, favour trades with positive overnight swap. 

Sunday, May 15, 2016

Week in Review: 9 May to 15 May 2016

I only opened two trades this week, one winner and one breakeven. The winning trade was quite funky, as I'll explain below.


I spotted a two-candle reversal pattern, in line with the downward trend, and went short at the break of the pattern. I initially aimed for a reward of 0.75R, which is below 1R. However, I spotted a potential support level near 1R, and felt safer taking profit at 0.75R.

Price did reach 0.75R... sort of. A major news release on Friday caused the AUDNZD to fall, but it also widened the spread considerably, up to 15 pips. The chart shows the bid price, but you need to add the spread to show the ask price (for a short trade, the ask price is what's used to exit the trade as you're now "buying" from the market to close the short).

Unfortunately the ask price failed to hit my profit target by a few pips, and reversed back up. With the market closing in a few hours, I decided to exit with a profit of 0.5R. 

It was a pretty funky trade, winning but not quite winning. 

Profit: +0.5R


Last week's Friday candle was bearish engulfing, so I felt confident going short on Monday. The major news event for this week was the Bank of England's monetary statement. This was coming out on Thursday, giving me over three days for the trade to act out.

Unfortunately, the trade went nowhere. A few hours before the BOE's news release, I decided to get out at breakeven and sit on the sidelines.

The BOE statement was neutral, although the GBPUSD rose a bit. I didn't see anything bullish from the BOE, and thought the GBPUSD's rise was unwarranted, and re-opened my short at a better price. 

At this moment, the trade is still open. An image of the original breakeven trade is below. 


I noticed that NZD crosses tend to have the biggest spreads. It should be taken into consideration when opening a trade, perhaps closing trades before news or the weekend. If you look at the AUDNZD chart on top, you can see that the spread's widened to 17 pips just before the close. 

Saturday, May 7, 2016

Week in Review: 2 May to 8 May 2016

This week's a little busier than usual. I'd entered four trades and finished the week up.


Late last week, I saw an upward trend channel and spotted a two-candle reversal off the bottom of the channel. This was going to be a longer-term trade, and I saw myself holding this for a week or two. I went long at the break of the bounce's high, and aimed for a reward of between 0.75R and 1R.

Unfortunately, the Reserve Bank of Australia reduced interest rates on the 3rd May. Since the AUDUSD and NZDUSD are highly correlated. the NZDUSD began crashing. Central banks are the biggest players in the forex market, so I thought it was prudent to move out of the way, and exited the trade at breakeven. Price continued to fall and would've triggered my stop loss.

Profit: 0R 


I felt that resistance between 1.45000 and 1.46000 was going to break. This resistance area had been tested twice in the last few months, and every test usually weakens resistance/support. My trigger for the trade was seeing a bullish two-candle reversal pattern. 

I aimed for a reward of 1.5R. Price did break and reached 1R, but then reversed on the 3rd May after the RBA decision. I guess the RBA's decision triggered a flight towards the USD. I got stopped out a day later.

Profit: -1R


This was a standard pinbar trade. I saw a bearish pinbar in line with the trend, and saw scope for a 1R reward. 

Profit: 1R


This was a tricky trade. Volatility had shrunk significantly on the AUDNZD, but after the RBA's decision to reduce interest rates, I felt bias was in favour of the NZD. The candle on 5th May was extremely small, so I felt a downward breakout was imminent (in favour of the NZD), and went short at the break of the low.

I initially aimed for a reward of 2R, but price didn't quite reach it in time. Since this was the first Friday of the month, NFP was going to come out. Also, the AUDNZD is quite exotic, and I've seen the spread widen to 30 pips before and after the weekend. I decided to take profit at 1R to play it safe. I probably should've aimed for a smaller reward in the beginning if I was planning to get out before the release of NFP and the weekend. The good thing is that I had reduced my position size for this trade to 0.5%, so even if I did hold the trade over the weekend, a loss wouldn't have been big. 

Profit: 1R


- If planning to close trades before the weekend, aim for a more modest reward. Alternatively, reduce the position size for the trade.

- Major news can cause correlation between multiple currency pairs, and should be taken into account (especially anything related to central banks).

- Don't stand in the way of a central bank.

Sunday, May 1, 2016

Review of April 2016

I chalked up another profitable month in April. I grew my account by 4.22%, which was slightly less than March (4.27%). 

Trades: 11
Account growth: 4.22%

Lower frequency of trades

I didn't trade as often as I did back in March. I only executed 11 trades vs March's 16.

Broke 10% benchmark

I also managed to reach the 10% growth benchmark, although a few losses in the last week of April brought me back down to 9.1%. I should reach 20% this year, and possibly even 30%. A 30% return would be fantastic, but we'll see. According to Myfxbook, my average monthly growth is 2.29%, so 30% is feasible. 

Next month

I spent a bit of time in April backtesting on the 4H timeframe. I'll probably continue to invest more time on the 4H in May. I'm not expecting much, though.