Account Risk: 0.6%
Short: 2x 0.7725
Stop: 0.7758 (33 pips)
Target: 0.7641, 4H 50MA & 200MA (84 pips, RR 2.6x)
Mindset: Uncomfortable about this but trading the signal

I’m not too happy about this set up, it’s right into a resistance zone that has been tested so many times it’s surely gonna blow! However I resolved to trade the setups I see, when I see them so here goes!

Trepidation is my middle name

I also made a decision to reduce my stop size to 10 pips off the high or low. I did this because my risk to reward isn’t good enough and my winning trades are too small compared to my losers. At the moment my win rate is less than 50% so I really need to make those winners count and – although untested – I think I’d do better in the long run to take smaller losses and get back into the market later.

I’m working on testing this now by writing an EA in MT4 to do some back-testing.

Anyway here’s the set up, it’s not the best example of a divergence!

Set up chart 4H

AUDUSD 4H Chart – 20 Mar

Here’s that daily resistance zone

AUDUSD Daily Chart – 20 Mar

There’s also a divergence setting up on the daily but I’m trading the 4H setup.

I’ve entered two positions, targeting the 50MA and the 200MA both very close together.

Update – Target hit – 22 Mar

AUDUSD 4H Chart – 22 Mar. Nice touch on my target.

Well this has been the most uncomfortable trade ever for me. I blogged about a chat with traders interview which had some really good quotes. The best one was that traders need to be comfortable feeling uncomfortable. It’s so true. I didn’t want to take this trade and I wanted to close it a few times, but stuck to my plan and I’m glad I didn’t underperform the strategy this time!

It’s my first trade which has banked over £100 profit for me. I know it’s small fry but it’s nice to hit that milestone. Hopefully there are many more to come!