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!