Last week, I saw three signals that I liked - USDCAD and NZDJPY on the daily chart, and gold (XAUUSD) on the weekly chart. Just before Monday opened, I realised that all three pairs were commodities (CAD, NZD and gold) and felt uneasy opening all three trades. I decided to trade the USDCAD on Monday and stay out of NZDJPY and gold.
By Monday's close, the USDCAD triggered my long, but barely moved up. In fact, volatility on Monday fell further. On Tuesday, the NFP for September came out and reversed the USDCAD.
Just before the NFP came out on Tuesday, I examined the situation and felt uneasy keeping my trade open. NFP is one of the most volatile news releases in forex, and I questioned whether it was wise to risk 1R for a 0.5R reward as my system dictated. Additionally, a profit target of 0.5R usually gets hit on the day my order is triggered, which didn't happen here.
Risking 1R for 0.5R was a stupid logic to use prior to a news release and since I didn't have a system to trade news releases, I decided to close and take profit, albeit a small profit. But it was a good decision since the NFP came out below expectations and would've taken out my stop loss. I think this was good trader thinking.
System Development
I'm still backtesting data on the EURJPY 5M chart with different filters and exits etc. I'm trying to generate more entries. ATM it remain very positive, but I want to be sure of my results before I post anything. This may take awhile.
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