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.