7 Jan 2015: Daytrade #2

I lost this trade on the AUDUSD. Price returned back to resistance, and I saw what looked like a strong rejection. I went short on the break of the rejection's low with a tight stop loss (3 pips), hoping stops would trigger below here. I got stopped out myself shortly after entry. 

The trade never really went my way, so the tight stop loss got me out quickly. 

Did my two trades, so I'm out for the day.

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7 Jan 2015: Daytrade #1

I got out at breakeven with this trade on the AUDUSD. 

Price bounced off the first 4H resistance zone, and I went short on the break of the bounce's low. 1D and 1H trends were down, so longer-term momentum was with me. My stop loss was tight (3 pips). 

Price did breakdown, but then stalled halfway towards my profit target before returning upwards again. At this point, I moved my stop loss to breakeven. Shortly after, I got stopped out.

That's the good thing about tight stop losses. You don't need to move them much to put your trade at breakeven. 

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6 Jan 2015: Daytrade #1

I only took one trade today so far, in keeping with my "2 trades per day" rule. I may open another trade during the Euro / US overlap later on. 

This EURJPY trade didn't quite work out. 1D and 1H trends were down, so I was bearish. I saw price bounce off resistance during the critical first 4H period of the day, and set a short entry on the break of the bounce's low. My stop loss was 5 pips.  

I was aiming for 18 pips (almost 4R), but price reversed before it hit my profit target. I had moved my stop loss to breakeven, but when I saw how strong price was flying upwards, I closed the trade at 0.5R profit, or a few pips. 

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5 Jan 2015: Daytrade #2

This was a tight trade. Looking back, I probably shouldn't have taken this as this trade took place during the European session. According to my research, price usually doesn't go anywhere.

But I took this trade because it looked like a fakeout that had just breached resistance (the salmon pink zone), but then fell back. I went short with a very tight stop loss (3 pips) when I saw the lower swing high form. 

I was aiming for a reward of 10R, but closed out at 5R (15.6 pips) when I saw price hesitating. I probably should've aimed for 5R-7R (the next support level) if I knew I was going to exit at the first sign of hesitation. 

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5 Jan 2015: Daytrade #1

I took this trade on the AUDUSD yesterday morning. 1D and 1H trends were down. Price had bounced off 0.81000 and formed the high for the first 4H, so I felt this would be the start of a downtrend for the day. I went short on the break of the swing low, with a fairly loose stop loss (9.2 pips).

I got out at the next support zone. Reward was 18.4 pips, or 2R.

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Will continue daytrading for this month

So I decided to continue daytrading for this month, but this time I'll look for bigger rewards (15+ pips, ideally 20+). 

I've also restricted myself to 2 trades per day, to encourage myself to trade only high-quality setups. This should help stop me from wasting my two "bullets" on whimsical, low-quality trades.

Reflection on the last month of scalping / daytrading

Well, I spent the last month trying to sink as much time as I could day-trading.

The good news: I made money.

The bad news: The broker took it! And some more.

Excluding transaction costs, I made about 3%. Once commission is factored in, that number went negative. Basically I was working for my broker.

I don't think that scalping or daytrading for reward sizes of 5-10 pips is worthwhile. Broker fees represent such a major handicap at these small levels.

I do think day-trading may be viable if you're aiming for relatively large rewards like 40 or 50 pips. With a 5 pip stop loss and 50 pip reward, your reward will be 10R, so you're basically hoping to swing home runs with each trade. I'm not sure if I'd have the "psychological capital" to withstand this style of trading, though. You'll be enduring strings of losses before you finally hit your "home run". But when you do hit it, broker fees won't eat so much of your reward. I believe this can be profitable. For example, I know that the AUDUSD tends to establish its daily high or low within the first five hours of each day. If price is at a significant S/R level within this 5-hour window, there's a good chance that it will be the high or low for the day. You could trade a reversal at this level, and try to ride it for most of the day and hit that 10R reward.  

Day-trading also demands alot of screentime. Most of the time I didn't mind as I could listen to music or read articles / Facebook on a second monitor while waiting for a setup. However, if you have a job or an errand to do, you can't trade. The opportunity cost is definitely high. 

I'm still thinking about how to proceed for this month.