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.