Forex Trade Summary (11 June 14)

Haven't been able to catch the early trades due to work commitments. Today's only trade is riding on a strong bearish sentiment on the EUR/JPY pairing. JPY is regaining it's strength and seems to be doing so for the next few months. 

Disclaimer:  This is purely for sharing purpose only, not a trading advice or instruction.

Trade: Short on downtrend pullback. Take profit at 19.3 pips.

Review: Both short and long term trends were down, same thing  for USD/JPY pairing. This means the bullish sentiment for JPY is still very strong. Trade was initiated by limit order that was placed along downtrend line and caught a peak before continuing downwards. Quick and relatively large profit of 19.3. Good trade.

Trade: Buy at uptrend pullback after confirmation of continuation. Averaged down on same bar. Quick exit after 3 bars at average of 9 pips profit.

Review: After confirmation of upward continuation (kicker bar touching trendline), I waited to see if price would come down for a better position to buy. That decision was rewarded by a mini pullback followed by a big green bar to solidify profits. Confidence of taking long position was strengthened by medium term long trend on the 1 hr chart.

Summary

Both trades today were in-sync with the longer term trends shown on the 1hr charts. This gave me more confidence to take my trades and wait out for a profit, although the trades today were quite swift. This also makes a difference in the confidence to average up/down for a better overall position.

Forex Trade Summary (6 June 14)

Due to work commitments, I haven't been able to trade actively for the past 2 days. But I still managed to catch this short term trend reversal on the EUR/USD on Friday.
Disclaimer:  This is purely for sharing purpose only, not a trading advice or instruction.

Trade: Trend reversal from down to up, higher peak and higher trough. Buy after confirmation of upward signal. Averaged down on next bar. Profit taken at average of 7.5 pips.

Review: After a gradual downward movement on the 5min chart, trend reversal is signalled by higher peak. Took position after a 3 bar upward confirmation.  First position was a little high, thus averaged down on the next bar. Quick exit within 5 bars at previous symmetrical resistance, in case it turns into a sideway movement.

Forex Trade Example (3 June 14)

Like I said earlier, this blog is not a trade advice or even a trade education course. It was set up to record my own trades and to share my own trading methods with other trading enthusiasts who wants to find the best method for themselves. In testing out my methods over the long term, I encounter some difficulties in coping with market volatility and my own psychology. These problems are what many retail traders face all the time. Only if we curb them, can our trades have higher probability of winning. The second trade today shows how trading psychology can be your greatest pitfall.

Disclaimer:  This is purely for sharing purpose only, not a trading advice or instruction.

Trade: Set order to buy at trough, sold at 12 pips profit after exceeding previous peak.

Review: Short term downtrend ended, long term uptrend resumed by higher peaks and higher troughs. Position taking was a little hasty, but due to the long consolidation phase within the hourly uptrend, prices are likely to spike rapidly, order is set to buy in a more favourable price.

Trade: Buy on uptrend pullback. Got caught on a bigger pullback, but did not break previous support. Closed position at breakeven point, in case it is a longer consolidation phase.

Review: Long term trend observation is correct. But was too hasty on taking position. Could have waited until upward signal was present at 2015hrs before taking position since previous trough was not broken yet.

Trade: Sell when previous trough is broken, confirming start of downtrend. Quick profit taken at 5 pips.

Review: This is a break out trade. Since downtrend is confirmed, and downward movement is usually faster and shorter, short position is take quickly and averaged up on the next bar. Profit taking is also done quickly before a strong drop is followed by a strong pullback.

Summary

Trades 1 and 2 today were too hasty to take position. As a result, the position taken was either unfavourable or not confident. Make sure directional signs are in place before taking a position. The third trade was a quick breakout. An unusual trade for me, but seeing the opportunity of a downward break, I quickly shorted at break trough to take a quick profit. Trades can come in different forms, as long as you are confident to hold out for the time and profit target set out, it will be a good trade.

Forex Trade Summary (28 May 14)

Trend was more obvious on the JPY related pairings today. Did 2 good shorts today, and also learnt a good lesson about not trading against the long term trend. See second trade below.

Disclaimer:  This is purely for sharing purpose only, not a trading advice or instruction.

Trade: Sell on downtrend pullback. End of pullback is confirmed by long red bar after dojis. Take profit set at near previous low. Trade closed at 10 pips profit.

Review: Obvious downtrend. Waited for confirmation of downtrend continuation before taking position. Good trade.

Trade: Trying to take advantage of short term pullback to gain a little profit on a general down trend. Market moved against trade. Cut loss at previous support level. Loss 5 pips.

Review: Too hasty to make profit during indecisive market period. Should avoid if not clear whether trend is reversing or continuing. Bad trade.

Trade: Short on downtrend continuation after head and shoulders pattern. Previous low was broken, and downward momentum shown by red bar after long legged doji. Took profit at 5 pips.

Review: Head and shoulders pattern is more obvious when viewed on the 30min chart.  Even without the head and shoulders chart pattern, the downward trend reversal is eminent with the lower troughs and lower peaks. Since downtrends typically last shorter, and have a larger momentum, I would go in early, as soon as trend continuation is confirmed.

Summary

Short positions usually last shorter, hitting profit target faster. This reduces market risk as well as your heartbeat. But you have to take advantage of it early. Avoid trading during pending market news, sideway trend or consolidation, or if there are any signs of trend reversal coming.

Forex Trade Example (27 May 14)

Following the weak trends on Monday, most major pairings were still indecisive. The Euro experienced a short term trend reversal against both USD and JPY. UK's pending release of borrowing figures made investors even more unsure. In the end, it sparked a dip in the British Pound. A good day to avoid the GBP.

Disclaimer:  This is purely for sharing purpose only, not a trading advice or instruction.

Trade: Buy on uptrend pullback near trendline. Prices moved against trade. Average down after spotting doji and reversal signal for upside pullback. Got out near previous support/resistance level of 1.3653 with a slight profit.

Review: New low breaking previous low signals a trend reversal from up to downtrend. A way to close the trade would be to cut loss at first break of previous low. However, a doji and a minor reversal signal was seen, thus I averaged down the trade to close all positions at pullback to minimise losses. Since previous support is at 1.3653, pullback resistance should be around the same level, thus all positions were closed there.

Trade: Sell on downtrend pullback after downward kicker signal.

Review: Trend reversal from up to downtrend, seen by lower trough and lower peak. Sell and got out within 3 bars. Profit 5 pips.

Summary

5 min charts today were no trending obviously, therefore 15 min charts were used to see the clearer picture. In times of a trend reversal during an open position, there are 2 options. Cut loss immediately after break out, or average up/down positions and minimize loss at first pullback (see first trade on top). Averaging up/down is riskier. I only do it when I see signs of a strong pullback.

Forex Trade Example (26 May 14)

It always takes a longer time on Monday to clearly identify the general trend. But it was more obvious on the more stable AUD/USD pairing. 

Disclaimer:  This is purely for sharing purpose only, not a trading advice or instruction.

Trade: Slight but steady uptrend. Buy on pullback and after doji is seen. Sell near previous high, after 4 bars. Profit 5 pips.

Review: Straight forward trend following trade. Waited for confirmation of uptrend continuation before taking position. Although not at lowest point, but trade probability was higher.

Forex Trade Example (19 May 14)

A sluggish Monday to start the week off. Spotted an early steady trend on the EUR/USD pair 15 min chart.
Disclaimer:  This is purely for sharing purpose only, not a trading advice or instruction.

Trade: Buy on uptrend pullback after confirming it has resumed upswing (big green bar around trendline area). Caught it right before the bar ended. Took profit near previous high, which turned out to be a temporary resistance before swinging up some more.

Review: Good entry point after confirmation of trend continuation. Maximized profits at take profit. Good trade.

Forex Trade Example (14 May 14)

With the market waiting for Bank of England's inflation report and several European countries announcing their CPIs, most pairings were heading sideways as investors were being cautious. Nevertheless, there is still enough volatility to trade on the 5 min chart. Below shows 2 trades caught on the EUR/JPY pair.
Disclaimer:  This is purely for sharing purpose only, not a trading advice or instruction.

Trade 1

Trade: Downtrend reversal confirmed by higher high. Buy at pullback. Upward momentum wasn’t strong enough, so got out quickly at 0.5 pips.

Review: It’s good to get out of a position you feel uncomfortable in and re-assess.

Trade 2

Trade: End of pullback after hammer doji and 3 bar reversal signal. Buy when next bar hits a lower price. Took profit at 5 pips.

Review: First pull back of trend reversal was made clearer by doji. Took advantage of fluctuations to take a lower long position in order to maximise profits.

Summary

Be it higher high, lower lows, dojis, big green/red bars, the more signals you see, the stronger the momentum,  the higher the probability of the trade. Dojis alone mean nothing if there is no confirmation bar after. A doji only signals uncertainty between the bulls and bears. The next bar will tell you whether the bulls or the bears are in control. This direction must also coincide with the general trend before you decide to take a trend following position.

Forex Trade Example (12 May 14)

With most pair being sideways and having erratic movements, I only managed to pull off one trade on the most stable pair, AUD/USD. 

Disclaimer:  This is purely for sharing purpose only, not a trading advice or instruction.

Trade: Buy on uptrend pullback after green bar appeared somewhere near trendline. Took profit close to previous high at 7.6 pips.

Review: Simple and straight forward trade, taking advantage of the early stages of an uptrend and the low of the pullback. Good trade.

Forex Trade Example (9 May 14)

Had been a little busy this week. Didn't trade for 2 days. But I managed to catch this uptrend on the USD/JPY chart.
Disclaimer:  This is purely for sharing purpose only, not a trading advice or instruction.

Trade: Buy on uptrend pullback after seeing upward signal. Price moved down some more after breaking previous high. Didn’t take profit as target was not hit and there is potential to move higher.  Did not cut since previous low was not broken. Took profit at 6.3 pips at next surge.

Review: Could have taken profit at first upward move about 8 bars later. Not worth the risk of trend reversal for a little more profit.

Summary

Sometimes during days of quiet activity, it is better not to trade than to enter into a bad trade in which you need to wait very long for the market to react. But one trade a day should not be a problem.

Forex Trade Example (6 May 14)

It has been a quiet day. Only managed one ideal trade today on AUD/USD. The other trade was a take profit from the previous day.
Disclaimer:  This is purely for sharing purpose only, not a trading advice or instruction.

Trade 1 (5 May 14 1600hrs)

Trade: Buy on short term uptrend pullback. Prices slid, but held above previous resistance, sticking to medium term uptrend. Held on and got out at 1.1 pips at end of the day.

Review: Very short term upsurge, caught too late. Good that medium term trend is upwards and got out before the next trading day. Not a good trade.

Trade 2 (6 may 1400hrs)

Trade: Buy on gradual uptrend, 15min chart, ignoring large doji due to Australian retail sales announcement. Took position at upward swing after pullback. Took profit at 4.1 pips.

Review: If not for the large doji, would have held on for a little more profit, nearer to previous high. But technically not advisable. Good trade.

Summary

The second trade showed 2 points in technical trading. First, refrain from trading during times of important news announcements. There might be a large adjustment to the market. Whether it affects the upcoming trend of not, it will show in the next few bars and price action. Second, ignore absurdly large movements on the charts within 1-2 bars during a news announcement. It will could your judgement of reading the real trend and direction signals.

Forex Trade Example (5 May 14)

I'm proud to say that after today's trades, account balance has grown by 11% since the account was set up for the purpose of this blog, with the first trade done on 9 April 2014. Thank you for reading. Comments are greatly appreciated.

It's a slow start to the week. Trends were very gradual. Nevertheless, there is still profits to be made.
Disclaimer:  This is purely for sharing purpose only, not a trading advice or instruction.

Trade 1

Trade: Short after spotting star doji after a short term uptrend/pullback, and a long red bar after the doji. Waited for next 2 bars to take position on a high and auto took profit at 4 pips.

Review: Since we are trying to take profit from a pullback, it could swing either way, thus it was good to get out quick. Good trade

Trade 2

Trade: Strong pullback on uptrend, but did not fall below previous low (bar body). Bought after spotting hammer doji and confirmation green bar. Quick exit at 3 pips.

Review: Trend was not very strong, but short term direction was confirmed by doji and resistance level. Quick trade to minimize risk.

Trade: Short on downtrend pullback, at first sign of downward movement. But pullback was stronger than expected before continuing downward movement. Quickly took profit at previous low before bar ends.

Review: Too hasty to get into position when pullback has not touched trendline. Noticed that downtrend was ending, or switching to sideways, so quickly exited.

Summary

Sometimes it might seem that we take profit too quickly and forgo the next few bars when price continue to go in our favour. But what we are essentially doing is to use the highest probability to take a small amount of profit, so that our hit rate is high. For some reasons, the market could turn against you and staying longer in position increases the chance of it happening.

Forex Trade Example (2 May 14)

Made 3 good trades and 1 bad trade today. The last trade (the bad one) was due to not noticing slight signals of trend ending. The first 3 trades gave me too much confidence that I didn't notice the details. Still managed to get out at break even and make a decent overall profit today.
Disclaimer:  This is purely for sharing purpose only, not a trading advice or instruction.

Trade 1

Trade: Buy on uptrend pullback, after confirmation of uptrend continuation. Took profit quickly at next bar,  when it almost hit previous high.

Review: Good to wait for a small pullback before taking position to gain maximum profit. Quick and decisive profit taking. Good trade.

Trade 2

Trade: Quick buy at uptrend pullback, at point almost hitting trend line. Quick take profit after 1min after seeing doji, knowing it is not the end of pullback.

Review: A bit too hasty to take a position without confirmation of trend continuation, but quick profit taking minimized the risk.

Trade 1

Trade: 15min charts. Sell after pullback on strong downtrend. Auto take profit at 5.1 pips. Exited trade at the 6^th bar.

Review: Since it’s a strong down trend, there is more reason to take profit at slightly below previous low. Straight forward and good trade.

Trade 2

Trade: Tried to sell on a downtrend after a strong pullback. Price moved against position. Quickly got out at break even point.

Review: Bar bodies did not overshot previous high, but candle wicks did. Signalled the end of downtrend. Should have noticed more carefully. Not a good trade.

Summary

There are bound to be times when you make a mistake or sometimes the market just go against you without you knowing the reason. When that happens, be quick to get out. Set a break even point if the volatility allows a pullback to hit it, if not, set a cut loss where a pullback level will hit, or just cut loss immediately. Re-assess when you are out of the mess. There is always another trading opportunity.

Forex Trade Example (1 May 14)

It's labour day! Markets were not very active, nevertheless, I still managed to pick out one trade to profit 5.1 pips in 2 hours using a 15 min chart.

Disclaimer:  This is purely for sharing purpose only, not a trading advice or instruction.

Trade: Buy on gradual uptrend pullback, after big green bar confirmation. Auto take profit just below previous high @ 5.1 pips.

Review: Obvious trend. Patient to wait for confirmation and lower price before taking position. Quick take profit within 10 bars. Good trade.

One trade is good enough for labour day. After all, it's meant to be a break from work.

April Trading Summary

It's been 3 weeks since my first Forex trade example was posted. Let's tabulate the results of trading for the month of April. Having an initial capital of $100,000 and by using a leverage of 50 times, with each trade not risking more than 30% of maximum tradeable units, the account balance has grown by 9.32% to $109,323.39. Total active trading time was about 3 weeks, from 9 Apr to 30 Apr.

This is achieved by using one main strategy of trading with the trend, getting into position at the end of a pullback, and taking profit quickly. Of course there have been many instances that the trades were not so straight forward, having to bring  in other factors like medium to long term trends and false breaks. Sometimes quick profit taking might result in losing out on higher profits, but this strategy is all about minimizing risk and preserving capital to achieve constant profits in the long run. At times, cutting loss is also essential to preserve capital when a position is taken wrongly or when the market goes against you for some reason. Get out, re-assess and get in again at the correct time.

Trade account balance for the month of April 14

I will be continuing to trade with this account and strategy to further prove its worthiness. Thank you for reading and following. If you have any comments or queries, feel free to leave a comment below. All questions will be answered. Please share this site if you think it is useful. Thank you.

Forex Trade Example (30 Apr 14)

All trades today were made using 15min charts, as market movement was quite flat on a 5 min chart.

Disclaimer:  This is purely for sharing purpose only, not a trading advice or instruction.

Trade: Using  15 min chart. Buy on uptrend pullback, after spotting upward kicker signal. First buy was high, averaged down on the same bar. Set take profits of 5 pips, which hit on the 4^th bar.

Review: Good to spot upward kicker signal to take position at bottom of pullback. Could have waited till the end of bar before taking position, then averaging down will not be needed. Since movement is not large, take profit has to be adjusted accordingly.

Trade: On 15min chart. Spotted hammer Doji after long consolidation. Took long position anticipating strong upward action. Set smaller take profit in case price continues long term downward trend.

Review: Risky trade. Consolidation during long term downtrend might result in strong downward action. Size of Doji too small.

Trade: On 15 min chart. Sell after downtrend pullback and signs of downtrend continuation. Auto take profit at 5 pips.

Review: Good to wait for downward signal before selling, made use of longer term trend. Since movement is large, take profit could be more. But overall a good trade.

Summary

It's a good practice to switch between 5min, 15min, 1hr and 1 day charts to get an idea of the short, medium and long term trends. This will give you more versatility and confidence in your trades.

Forex Trade Example (29 Apr 14)

Two quick profit takings and one cut loss trades today.

Disclaimer:  This is purely for sharing purpose only, not a trading advice or instruction.

Trade: Sell on a strong but gradual downtrend, after pullback and downward confirmation. Took position on short term pullback. Took profit immediately at next bar after 5.9 pips.

Review: Quick and decisive trade. Since trend is gradual, it might take very long to hit intended profit again.

Trade: Sell after spotting Doji on top of 15 min bar uptrend, and next bar falls before the bar before (reversal signal). Take profit set at uptrend trend line, anticipating a strong pullback. 4.4 pips profit.

Review: Quick and decisive trade. As anticipated, there was a strong pullback after 5 bars.

Trade: Sold upon doji at top of uptrend, anticipating a strong pullback. Didn't happen. Cut loss at 2.8 pips after next pullback until trend line.

Review: Risky trade to go against long term trend. However, cut loss was done well at next pullback to retain capital.

Summary

If a trade against the general trend is taken, profit taking must be quick, preferably within the next 3 bars, in case trend continues. If price moves against position, take cut loss at the next major pullback. This type of trade is not recommended.

Forex Trade Example (28 Apr 14)

Only 1 trade today. Most pairs were inactive or didn't show any obvious trends.

Disclaimer:  This is purely for sharing purpose only, not a trading advice or instruction.

Trade: Sell on short term downtrend, after previous low was broken. After a large upsurge, pullback has to be quite strong. Nevertheless, it’s short term, so took profit at next bar.

Review: Risky trade. Long term uptrend can continue after a large upsurge. Good to take profit very quickly.

Forex Trade Example (25 Apr 14)

Made 2 very good and straight forward trades today. Reduced my profit taking average to about 5 pips.

Disclaimer:  This is purely for sharing purpose only, not a trading advice or instruction.

Trade: Short on downtrend pullback. Auto take profit at 4.3 pips. 

Review: Very clear trend. Went in a little too early, but still on the trend line. Quick take profit within 10 bars. Good trade.

Trade: Buy on uptrend, after pullback and reversal confirmation. Auto take profit at 6 pips, before previous high.

Review: Obvious trend. Waited till doji to confirm uptrend continuation. Quick profit taking after 5 bars. Good trade!

Summary

Auto profit taking takes the stress out of you to click and makes sure you close your position even when it is a quick spike. Taking profit at less pips lets you do a good trade and lessen the chance of market 'noise' affecting the time spent in the position, making it riskier. Remember, less profit is better than no profit. If you have set a level, stick to it as much as possible.

Forex Trade Example (23 Apr 14)

Market movement was slow at the start of the week due to the Good Friday long weekend. Trading volume dropped and price movement was slower. Thus, I only resumed trading on Wednesday. Made 4 trades. 3 were profitable, one broke even.
Disclaimer:  This is purely for sharing purpose only, not a trading advice or instruction.

Trade: Sell on pull back after a large downward price movement. Spotted Doji and relatively big red bar and took short position. Market moved against trade to make a bigger pullback, but still below previous top. As long term (hourly) trend was still downward, position was held until next drop and took profit near previous low.

Review: There was a chance to take a quick profit about 10 bars later, at 1300hrs, after realizing market did not move as planned. 

Trade 1

Trade: Slight downward trend. Short after pullback. Took a quick profit because daily trend was uptrend, risk of a upward spike any time.

Review: Could have waited till end of bar to take profit. Still a good trade.

Trade 2

Trade: Higher highs and higher lows shows trend reversal. Buy on uptrend pullback, and averaged down. Price went against trade. Held on due to long term uptrend and possible sideways short term trend. Took profit at first position break even point with profit on second position.

Review: End of pullback was not confirmed. Too hasty to take long position. 

Trade: Short after downtrend pullback and downward turn on long red bar. Auto profit taken at 10 pips.

Review: Good and confident trade. Patient to wait till downward turn before taking position.

Summary

Market might move against you right after taking a position. That is mainly due to the momentum of the pullback being too strong. But as long as the major trend is in your favour, holding out for profit is possible.

Forex Trade Example (16 Apr 14)

A continuation of trend trading methodology. It doesn't work smoothly all the time. Patience and correct entry point is key.
Disclaimer:  This is purely for sharing purpose only, not a trading advice or instruction.

Trade: Buy on uptrend pullback after previous high was just broken, and a hammer doji together with a confirmation green bar was seen. Very strong uptrend with a long consolidation, thus held on for about 20 bars before putting break even take profit.

Review: Price jumped 2 bars after take profit to continue trend strongly. But it was too risky to hold for so long. Correct prediction but market did not move fast enough. No capital loss, still a fair trade.

Trade 1

Trade: Buy on uptrend pullback. Took profit at about 8 pips, after 10 bars.

Review: Good trade. Position taken almost at low of pullback. Confidence in holding on for profit, and got out before previous high is hit to minimize risk.

Trade 2

Trade: Continued to buy on uptrend pullback. But trend continuation wasn't strong, seems to be heading towards consolidation phase. Took profit at next temporary upsurge, about 10 pips.

Review: Took a good position at low of pullback. Quick to get out with a profit even though trend continuation is not eminent. Good trade.

Summary

Look out for slight signals like dojis and kicker reversal signals. They might indicate the strength of the trend continuation. The longer the consolidation, the stronger the next up or down move will be.

Forex Trade Example ( 10 Apr 14)

Consecutive trading day post. The 2 trades below continues to illustrate trend trading, and how it helps you to hold your position in confidence.

Disclaimer:  This is purely for sharing purpose only, not a trading advice or instruction.

Trade: Buy during strong pullback on an uptrend. Took profit after about 15 bars since it seems to be going into consolidation phase.

Review: Good position taken at bottom of a pullback. Right decision to pull out to minimize risk, re-assess and take another position.

Trade: Buy during an uptrend pullback. Trendline broken, but previous support low is not compromised. Took profit at 10 bars to minimize risk.
Review: General direction was correct. Broken trendline signifies longer consolidation or change of short term trend. Good to get out quickly with profit.

Summary

Continue to trade with the general trend and take profits quickly. Normally I would be very satisfied with a 5 pip profit. Conservative take profits would be the previous high (for uptrend buy) and previous low (for downtrend sell). Remember, capital preservation is key to trading. No capital, no trade.

Forex Trading Example (9 Apr 14)

As mentioned in my previous post, I will be posting some Forex Trade Examples that illustrate my trading methodologies. Throughout these posts, you will see examples of taking quick profit, cutting loss and holding out to break even. There will be good trades and bad trades, just like what every trader will experience. 

Disclaimer: This is not a trading advice or instruction, it is only for the purpose of sharing a personal opinion on trading.

Trade: Buy on uptrend pullback, averaging down as the kicker reversal signal is formed. Took quick profit at next green bar.

Review: Might have been better to take half profit and risk the other half for higher profits after the strong kicker reversal signal.

Trade 1

Trade: Sell after downtrend pullback. Quick take profit after 3 bars.

Review: Good trade. Waited for confirmation of trend continuation, took profit quickly.

Trade 2

Trade: Sell at downtrend pullback. Price moved against trade. But long term trend was still strong downtrend, hence, held on for next big continuation as long as top resistance is not broken.

Review: Didn't wait for confirmation of trend continuation, hence larger risk was taken. If long term trend was not strong downtrend, would have cut loss after previous high is broken. Not a very good trade.

Trade 1

Trade: Buy at uptrend pullback, averaged down as reversal starts to form. Took profit immediately to break even and wait for confirmation.

Review: Should have waited for confirmation of trend continuation. This is a longer consolidation period.

Trade 2

Trade: Buy after uptrend pullback and continuation confirmation with long green bar. Took profit quickly at next bar.

Review: Good to wait for confirmation. Price action will be stronger after a longer consolidation period.

Trade: Buy on strong uptrend pullback. Took profit at first big green bar to reduce time in market. Consolidation might take longer.

Review: Safe trade with strategic take profit. Good trade.

Summary

As you can see from above, some trades are spot on, some are a bit riskier, some needed a longer time for the market to move to your favour. As a general rule, if you trade with the trend, and reduce time in the market, there is less to worry about. The thinking should be done before making the trade, and not after taking a position.

Forex - Trading Methodology

In this post, I will touch on a Simple Trading Method which I use for Forex. I will also be posting up example trades to illustrate. This method uses technical analysis to trade. It has nothing to do with market news.

Trend Trading in Forex

1. Identify General Trend

• Trend can be upward, downward, or sideways (no visible direction). Upward trend can be identified by higher highs and higher lows. 
• In general, the trend should be easily identified with one look at the chart. The more obvious the trend, the better to trade. 
• In an uptrend, if the price falls below the previous low (support), it signals the end of the uptrend. Opposite is true for downtrends.
• Uptrends usually last longer than downtrends. 
• I usually only trade up or down trends. If I see a sideways, I'll skip to the next currency pair

2. Uptrend Buy, Downtrend Sell, Sideways Skip

Sounds easy? But when to buy and sell?

• Buy on pullback, or better, right after a pullback.
• During an uptrend, all the lows will normally connect to a seemingly straight line, or what we call a Trendline. 
• When a pullback happens, watch out for the next point where it touches the trendline. This is the time to buy. If you are more conservative, wait for it to touch the trendline and turn within the next few bars, then buy.

3. Taking Profit

• Once you have a position, set your cut loss and take profit. This is to remove all emotions while you are in an open position.
• In an uptrend buy, cut loss will be at previous low, in a downtrend sell, cut loss will be at previous high.
• Taking profit can vary to your risk appetite. Personally, I take profit no more than the previous high (uptrend) or no less than previous low (downtrend).

4. Duration of trade

• Try not to stay in an open position for too long. Markets are volatile and can turn against you any time. 
• I use a 5 minute chart, sometimes 15 minute charts to view the longer term trend. Note that short, mid and long term trends can be different at any point in time.

5. Some other things to note

• Avoid trading during times of major market announcements like US or China GDP figures or Federal Reserves announcement of rates. 
• Best trading hours will be from GMT 0700hrs to 1600hrs (Sg timing 3pm to 12 midnight), when European markets are most active.
• This trading method is not 100%. You might incur losses. Review your trades and see how you can improve. Stick to the rules as close as possible.

In the next post, I will share some real trades examples. Till then, happy trading!