Trade Example - 25 Jan 16

First day of trading with official Trading Out Loud account was a good start. 2 trades on SPX500 and 1 trade on EUR/JPY yielded about 4% profit. But a hasty trade on EUR/USD reduced it by 1%. Total trading income today was about 3% of capital.

Sell EUR/USD after strong downward signals

After a prolong upward trend, a strong downturn (might be temporary or permanent) is seen with long down bars and insufficient upward momentum right after. Decided to short 2 bars after such a signal. Market went against trade. Stop loss was placed at previous high in case market continues upward trend. As stop loss was hit, market took another downturn to continue downward reversal.

Unlucky to have hit stop loss at a high. However, trade entry was too hasty, and against the general trend. Should have confirmed the trend reversal before shorting at a correction point.

SPX500 at market opening

Lively market opening on the SPX500 with a general downtrend and an undecided market with large volume consolidation for first hour.

1st trade was entered as a short just before market opening to capitalise on the continuing downtrend and the volume during first 10min of NYSE opening. Momentum was undecided with strong signals in both directions, forming a wide and short consolidation channel. Minimized risk and took profit at previous low in case it became a "W" formation and upward rebound. Profit 4 pips.

2nd short trade was entered after confirmation of continuing downward trend, but breaking previous low. Entered position at next green bar to maximise profits. Closed trade with profit of 3 pips after 5 minutes.

EUR/JPY order hit after a long consolidation phase

Lastly, I took a trade on the EUR/JPY market. This long consolidation was too hard to miss. Placed 2 orders. One buy order 2 pips above and one sell order 3 pips below the consolidation midpoint. It eventually trigger the buy order. Stop loss placed at previous low. Took profit after 20 minutes at 13 pips. Turned out to be a intermediate high. Market did continue to move upwards eventually.

Review

Markets are volatile. Although trends tend to continue, it can turnaround any time. Reduce risk by spending less time in position and more time picking out the best entry point.

Short trades are generally quicker than long trades with downward movements being more rapid. (Fear is stronger than greed) Pick out selling opportunities more often, then you can get in and out faster with more profits.

Official "Trading Out Loud" Cash Accout

Happy 2016!

This year has an overall gloomy outlook on the markets. Impending rate hikes causing less liquidity in the market will affect traders in one way or another. However, the good news is, if you are doing very short term trading on forex and indices, market volumes are less affected.

It has been a while since I started posting trades using a practice account. To start the new year rolling, I have decided to start a fresh, cash trading account and will be posting every trade on this site for sharing. Yes, real cash trading! There will be no change in trading methodology, just that this time profits will be for real, so will losses.

So here goes.

USD1159.88 into "Trading Out Loud" account. Let's track our progress from here on. Awaiting Monday.

Trade Example - 22 Jan 16

EUR/USD. This short trade was done on a 15min chart with a downtrend. Position entered after downward reversal bars signal continuation of downward momentum. Took first profit of 6.4 pips within 2 mins.

Entered a second sell trade after temporary rebound, and averaged up 15min later to maximize profits. Set auto take profit at previous low, just in case it becomes a long consolidation phase. It did go down further eventually. Average profit of 3.6 pips.

15min chart of EUR/US, showing strong downtrend

Verdict

Good identification of trend. Trading with minimal risk as planned, taking profits quick.

Next few trades are on US SPX500 index, which can be very active close to NYSE opening hours.

First trade was too hasty on catching a spike after a long consolidation. After a week of downward momentum in the US market, this day is a gradual upward correction on the 5min chart. Seeing the upward continuation is not happening yet, stopped loss at next 3 bars.

2nd trade was at market opening after a first green bar exceeded previous high of 1896.9. Entered buy position at next bar's low. Held on to position even after subsequent red bar due to strong upward movement and breaking of previous high. Stop loss set at previous low of 1890.8. Took profit of 5.6 pips after 5 bars.

3rd trade took advantage of a strong downward correction as earlier investors are taking profits/cutting loss. Sold right after a strong downbar which came after 2 dojis, and out within 2 minutes.

Overall, it was a good trading day with enough volume to support the signals generated.

Forex Trade Example - 21 Jan 16

EUR / USD pairing sees a sharp downward reversal on the 5 min chart. 15min chart shows a continuous downtrend since previous day. Enter trade after confirmation of downward reversal, ie. lower low, and lower high. Maximize profits and reduce spreading cost by taking position after a green bar. Reduce risk by exiting market within 15mins. Profit of 3.2 pips

Downward Reversal on 5 min chart

Downtrend on 15 min chart

Significant drop in EUR/USD after closure of trade

Verdict

Quick trade, small and sure profit. Correct identification of long term trend and short term reversal. EUR/USD pairing dropped even more significantly thereafter due to Draghi's press conference.