Author Archives: murchuza

Gold DST Short – 27 Feb

Account Risk: 0.7%
Short: 2x @ 1254.8 & 3x @ 1258.7
Stop: 1266 (112 & 80 pips)
T1: 2x @ 1235 (198 pips, 1.75x RR). 4H 100MA & Daily 21EMA.
T2: 3x @ 1200 (587 pips, 7.3x RR). 4H 500MA, Daily 50MA & Daily 500MA
Mindset: Pretty even

Update: Part of order triggered – 1 Mar
Update: Limit order reached – 2 Mar

Been trying to improve on my routine for checking the markets and setting alerts. I just had an alert on Gold which has spiked up and come straight back down – across the bands. I’m waiting for a retest of the 8EMA to get short and then another re-test of the upper band to get short some more (building my position). The position size for each part is slightly different because the risk is less with the upper band set up.

The good thing about this trade is the two chart set up divergence on the daily and 4H charts. So I’ve tried to optimise my entries by going short for a smaller position on the 8EMA and a slightly bigger position on the upper band.

The targets are both set by the daily chart being the 21EMA and 50MA (which correspond with 4H MAs for now)

Here’s the two chart set ups.

Daily chart

Gold Daily Chart – 27 Feb. Marginal divergence from early Feb until now.

4H chart

Divergence and price action put in a decent down bar – crossing the bands.

It’s just an order for now but it’ll be interesting to see if I can get filled! Here are the details…

Gold Order Details – 27 Feb

First part of trade triggered

The first part of my trade was triggered. Price moved away from my entry and after initially moving my order down, I decided to wait and see if price action would come back up to my original order levels (partially because it had already hit the 4H 21EMA). So I put the orders back where they were. I was happy to take a lose at those levels for a run down to the Daily 21EMA.

Price came within 1 pip from filling the second part of my order, but it didn’t get hit so here’s where I am currently.

Account Risk: 0.3%
Short: @ 1254.8
Stop: 1266 (112 pips)
Target: Daily 21EMA @ 1233 (208 pips, 1.8x RR).
Mindset: Good – albeit feeling impatient. Dunno why!?

Price so very nearly hit my limit order, but pulled away since. I am looking for a reversal now down to my order. I wouldn’t be surprised to see this get stopped out now and another divergence set up on the higher timeframe.

One other thing to note: it’s great having a divergence show on the daily timeframe and therefore have a legitimate daily target to aim for. it makes managing the target so much easier.

Gold 4H Chart – 01 Mar 17

Limit order triggered

Well the price has yo-yo’ed around but it has now hit my order. I am pretty pleased with the trade, it’s a shame the other portion wasn’t part of the trade because I’d like to still see if we can run the remainder to the daily 50MA.

Here’s the final trade chart.

Gold 4H Chart – 2 Mar


Overall I’m really happy with the way I traded this:

  • Didn’t chase the market to get an entry
  • Didn’t get upset about my order not getting triggered
  • Didn’t panic when price missed my target and came against me
  • Didn’t close my position in frustration

Monthly review – Feb 2017

Overall I’d give myself a grade C
Account performance +0.16% (basically scratch)

Not a great month. I started trading on 23 Jan and we’ve now done a month of trading. The biggest failings have been my lack of routine (not checking the markets at set times so missing set ups) and trading too few markets (having no skin in the game). I started out the month looking at Daily and 4H charts of EURUSD, GBPUSD, EURGBP and Gold.

It seems to me you need to build up your trade history/mileage to get comfortable – so I need to be in more markets seeing more varying price action. Making a handful of trades each month won’t help me improve that quickly. So I need to expand the markets I trade and aim for around 10 – 20 trades a month (see updated trade plan)

In the later week I started following more of the major crosses, although I still managed to miss most trades due to lack of routine. So that’s something I’ve got to get licked ASAP!
In summary here’s what worked and didn’t.

Trade summary

This month I took 4 trades, 3 were winners, 1 loser. I also opted not to take a trade on the AUDUSD because although it set up, it was very close to resistance so felt like I might get needlessly stopped out. I also felt if I did try and trade it, I wouldn’t trade it well with my current level of experience.

Of all the markets I now follow there were 24 DST trades: 19 winners, 5 losers (so it should’ve been a great month).

Here’s a run-down of the markets and set ups.

  • Blue annotations are winning trades taken
  • Red annotations are losing trades taken
  • Black circles are missed DST set ups (they appear in pairs or triplets)
  • Dotted black circles would be missed DST trades that would’ve been a loser (I recorded these to help with my confidence)
  • Grey circles are DST set ups I wouldn’t know how to trade


XAUUSD 4H Chart – Jan & Feb 2017

There were only set ups on the 4H chart. I spotted two and took both – the second was marginal – but worked out. I was relatively happy with both trades, felt my target selection was good, but I did lose 40 odd pips by not moving my limit order in the morning.


EURUSD 4H Chart – Jan & Feb 2017

I didn’t realise my first trade was a double divergence, so I should’ve set my targets higher given the recent price action testing the 100MA. My other trade was a loser – a divergence that set up but then ultimately didn’t and proved me wrong.

What was frustrating was missing the next trade. I was following on my phone but didn’t check the market at the right time, so missed my entry!

Again no daily set ups.


EURGBP 4H Chart – Jan & Feb 2017

Missed these two trades, both would’ve worked out and the second trade was a double divergence so would expect price to go higher for the rest of this month.


GBPUSD 4H Chart – Jan & Feb 2017

Watched this first divergence really closely but the price action flew past any realistic entry. In hindsight I did wonder about trying to enter on the lower timeframe 1H. In theory it would’ve been possible but might’ve been difficult to juggle with work.

Here’s the chart. Would’ve definitely resulted in two attempts to make it stick.

GBPUSD 1H Chart – Jan & Feb 2017

The only other thing I noted was the divergent like behaviour testing the 200MA. Although price didn’t close lower, the MACD kept rising and it made we wonder if the 200MA was distorting price action a little?!

This is more obvious on the next chart.

BTW no Daily set ups again.


GBPAUD 4H Chart – Jan & Feb 2017

Here’s the better example of the 200MA distorting price action. Interesting to see if that plays out in the future.

Just one true divergence which I missed entirely! Looking back, I reckon it would’ve taken 3 attempts to make it stick.


GBPCAD 4H Chart – Jan & Feb 2017

Just one marginal divergence – I did spot this but just didn’t realise what was going on until it was too late. It’s much easier to spot a divergence once price action has been printed on the chart!


AUDUSD 4H Chart – Jan & Feb 2017

This market has been trending like crazy – there’s a nice trend channel in play. The first divergence on the chart I missed but worked out fine, the second one I bottled because it was so close to the upper resistance line. My stop would’ve been on or near the resistance area so it seemed stupid to me to take the trade.

Technically I should’ve taken the trade – my goal was a flawless month of taking DST trades, but I just didn’t feel comfortable taking this one.


USDCAD 4H Chart – Jan & Feb 2017

Two really nice divergences missed here. The second one is marginal again but I always included these scenarios in my back-testing. Disappointed to have missed these two especially as the first one coincided with a Daily divergence so I could’ve ramped up my targets.

USDCAD Daily Chart – Jan & Feb 2017


USDJPY 4H Chart – Jan & Feb 2017

Not sure I would’ve taken the first divergence, with the wicks going lower than the prior low and the decent divergence in play, I’d like to think I would’ve 🙂 The second divergence almost materialised into a double. Given the price action I could see this as a good place to add to a position if risk allowed.

Interesting to me how both were not really clear cut trade scenarios.


FTSE 4H Chart – Jan & Feb 2017

Just the one divergence, but I can see another nice one in the making! Nothing on the daily.


SPX 4H Chart – Jan & Feb 2017

Feels like the rise in the S&P is relentless. There’s a definite short setting up at the moment but again another set up I saw but didn’t really know how best to trade the price action (being inside the bands and not really having any clear swings higher or lower).

Nothing on the daily.

What worked

  • I didn’t break my rules
  • I’ve had a couple of +2x reward to risk trades
  • I generally picked good targets

What didn’t work

  • Due to a lack of routine. I missed the majority of set ups and wasted 40 pips by not closing one position!
  • My entries could’ve been better. I should scale in to positions more.
  • My position size wasn’t really big enough. I should increase this to 1% so I can build the account quicker.
  • I started off trading too few markets for my timeframes (not enough set ups coming along). I’ve expanded to most of the major currency crosses now.
  • Reviewing all timeframes before making a trade (forgot at least twice), so I didn’t know whether I was with or against trend and whether my targets might not be realistic.

Changes for the next month

THe key changes are more markets, more routine, looking back further and using the 1H timeframe for entries.

I also need to update the plan to include:

  • The change in markets markets
  • Revise my goals to be achievable for next month.
  • Add a section on routine (Morning, Lunch and Evening quick market reviews i.e. 10 minutes)
  • Start adding calendar reminders to review my plan at the beginning of each week
  • Set alarms to remind me to check the 4H charts when they are setting up
  • Get better at setting alerts

Mindset: Method hunting treadmill and importance of risk management

Trading is about managing pain, you’ve got to get used to losing and not thinking that you’re making a mistakeanon trader

Just heard an interview on Chat with Traders and felt there were a number of great pointers for people like me grinding it out in the early parts of the trading journey.

One thing that really surprised me is the part on systemising a strategy and how the discretionary element of the strategy can make something that seems profitable, unprofitable (starts at 14:40).

The following also felt particularly applicable to me and some of my old habits:

11:52 – 14:15 The ‘method hunting’ treadmill of new traders who obsess over entries and win rates.
21:20 – 22:24 Really understanding your strategy and accepting a lower win rate.
33:28 – 41:35 The importance or risk management and position size
49:30 – 52:14 Lack of risk management for a given strategy and not looking at position size, market correlation and trade approach together
52:14 – 53.45 The mistake of trying to achieve a linear performance and not truly appreciating that you win some, lose some.
53:50 – 54:40 Why you should only review performance in batches of trades so your changes are valid and meaningful.
55:50 – 56:03 The best advice of all, riding out the pain of a run of losers

Some other good quotes

(new traders) focus on the entry and when things stop working they go back to the drawing board … down the rabbit hole looking for Alice. That’s the treadmill most retail traders get on in the beginning. We call it method hunting.
new traders aren’t willing to accept a lower win rate because it doesn’t feed the psychology. They don’t want to experience any pain … human beings are always uncomfortable with risk but it’s really about how you manage it (that makes you a successful trader).
Being a good discretionary trader is about managing discomfort
The most important thing is risk overlays: how you bet, what size and how you’ll adapt to volatility over time.
Each time you trade the deck has been reshuffled and if you lose it really doesn’t mean anything … you win some you lose some and you have to be comfortable with that. So start thinking about blocks of trades rather than analysing one or two losers
If I lost this trade it must mean I made a mistake, and if I win this trade it must mean I’m pretty smart. Unfortunately the truth is neither is true. You win some you lose some and you have to become very very comfortable with that and grind it out

AUDUSD Set up – 23 Feb

I really want to take this short trade but as it currently stands the entry is too close to a major resistance level for me to be comfortable.

It’s a really tough decision given the triple divergence but I just feel it would be stupid to put a 20 pip stop off the high to coincide with that exact level of resistance.

Here’s the set up on the four hourly.

A triple divergence in play BUT price hasn’t hit the upper trend line or the prior resistance level.

I would typically be looking to take 2x positions at the 100MA and the 200MA as targets.

To mitigate this nearby resistance level I considered putting on a 40 pip stop, to give me more breathing space, but that blows out the risk to reward (goes <1). It would also just feel stupid to risk more. In these early days of trading a new system I don’t think it would do my confidence any good to break the odd rule just yet.

Price has recently broken out of a monthly channel going back 4 years. So a trade down to retest the monthly upper channel (blue line) would be a great target – but I would only run the trade to that level once I’d booked some profits on the majority of my position.

So I’m standing aside for now. I will wait and see if price wants to come higher (whilst diverging) to enter the market. It might not, but I wouldn’t be happy to have a wider stop or place a stop right on the resistance line.

Here are the higher timeframe charts


Long term trend line recently broken to the upside. Could a retest be on the cards?


Price has been in a sideways channel for 18 months. There’s also a weekly divergence in the making.


A divergence might be setting up here too.

EURUSD DST Long – 12 Feb

Account Risk: 0.7%
Long: 1x @ 1.0635 & 1x @ 1.0631
Stop: 1.0586 (45 & 49 pips)
T1: 1x @ 1.0719 (85 pips, 1.7x RR). 4H 50MA.
T2: 1x @ 1.0756 (125 pips, 2.7x RR). Daily 100MA.
Mindset: 50/50, ok set up. My long term view is up, short-term view might be down. Lots of MAs to bounce around.

Update 1 – Something’s bugging me – 13 Feb 2017
Update 2 – Divergence didn’t materialise – 13 Feb 2017
Update 3 – Stopped out – 14 Feb 2017

Watched this chart into the close on Friday to see if price action would close inside the bands. It’s a divergence on the 4H but also a double divergence on the hourly chart. I’m really 50/50 on this trade, my instinct tells me that prices are going to go lower (not higher). But I’m about trading the divergences I see rather than my opinion so I’ve placed a trade.

I’ve slightly upped my position size to nearer 1%. I’ve got two targets in mind so I’ve opened two positions. My first target is the 50MA on the 4H chart. The other is the 100MA on the daily chart. Price has recently tested the daily 100MA, before coming down to the 50MA, so I’m looking for a retest.

4h Chart – Set up

4H EURUSD Chart – 12 Feb 17

Hourly Chart

Here’s the hourly chart that gave me more confidence to place the trade.

Hourly EURUSD Chart – 12 Feb 17

Daily Chart

Here’s the Daily chart showing the 100MA target I’m looking at.

Daily EURUSD Chart – 12 Feb 17

Update 1 – Something’s bugging me

I judge how well I’ve executed a trade by how often I check on price (e.g. how nervous I am). Usually I just let it do it’s thing, but something was bugging me and I kept checking on the price action during the day. I think it was the way I set up my targets, I am happy with the 4H target, but I have no real justification for the Daily target (there’s no divergence setting up on the Daily chart).

I’m also not happy about the number of bigger MAs in the way of my targets. I don’t have a great feel for their significance yet.

So I’ve gone back over my charts to recheck what’s going on.

Quarterly Chart

Quarterly EURUSD Chart – 13 Feb 2017

We’re on the lower trendline of a major trend channel going back to the 80s. I think it’s more likely to assume we’ll continue in this trend until proven otherwise (for me that would be a number of quarterly closes below the trend line) and the monthly chart pointing towards more downside.

Monthly Chart

The monthly chart kind of looks bullish to me. We’ve got an almost formed divergence.

Monthly EURUSD Chart – 13 Feb 2017

Weekly Chart

This looks to me like we may come lower to test the lower band. So perhaps more downside on the cards before any move higher?

Weekly EURUSD Chart – 13 Feb 2017

Thoughts going forward

The Daily and 4H Charts haven’t really changed from above. I don’t think I have justification to aim for a daily 100MA target without a daily divergence. This morning the hourly timeframe hit the 50MA (21MA on the 4 hourly).

So I think I need to rethink my targets.

Looking again at the Hourly and 4H charts

On the four hourly chart we’ve tested the 21MA 3 times (the last time was this morning), we’re chopping around the 200MA but I’m ignoring it for now – from back-testing this happens quite a bit.

4H Chart – 13 Feb 2017

The 500MA looks like a fair target for a retest to me and the 50 is heading down so I can see price hitting both MAs at a similar level. So I’m happy to pick that as a target.

As I’ve been typing this the Euro has been heading lower, but it looks to me like a triple divergence might set up on the hourly chart (see my purple and grey lines)

Hourly Chart – 13 Feb 2017

If it does and sets up with the bands I’m currently thinking I’ll up my position to the full 1% and target the hourly 100MA. Something I wasn’t thinking I’d say when I set out to update this post.

The hourly 50 got tested this morning and the divergences are fairly clean (for now).

So – at the moment – the trade is:

Account Risk: 0.7%
Long: 1x @ 1.0635 & 1x @ 1.0631
Stop: 1.0586 (~47 pips)
Target: 1x @ 1.0684 (1x RR, 50 pips) 4H 500MA.
Mindset: Happier with the target but not the RR.

I will watch the hourly chart for the triple divergence set up.

Update 2 – Divergence didn’t materialise

I set some alarms and checked the 3, 4 & 5pm closes on the hourly chart and price didn’t make it back into the bands. The 4H divergence also didn’t materialise, price headed lower. So this looks like being a loser (not stopped out yet).

4H EURUSD Chart – 13 Feb 2017

Interestingly stops should really be set as points at which you’ve been proven wrong. I feel pretty satisfied that I’m not right on this trade. So maybe I should be reducing my stop margin?

Can’t say I don’t feel a little disappointed about this trade, the set up seemed pretty sweet at first. If the hourly chart had closed inside the bands this afternoon it would’ve been a text book set up too. Oh well, I heard a trader interview with someone called Michelle Koenig she made an interesting observation about trading emotions and taking loses.

To take the emotions out of trading you need a trading plan/strategy which tells you why you’re getting into those trades and how you’re going to manage those trades; but also time in the seat, so as time goes on, the big emotional roller-coaster becomes more like rolling hills which then becomes a washboard or driving down a bumpy road.

Update 3 – Stopped out

Just got stopped out of my trade, I thought it might turn around after a small dip overnight, but no such luck. The position closed at 1.0586. No great shakes.

4H Chart EURUSD – 14 Feb 17

Thinking about the trade execution:

  • I definitely could’ve picked better targets initially. I was happier with them in the end.
  • The entries were okay but for future I might look to lower timeframes to get confirmation and a better entry price and risk to reward
  • The risk to reward was verging on sub 1 (so not worth the risk). I need to be more careful of this scenario
  • I’m glad I was trading at a bigger size – I want to be moving on with my account
  • I think the trade was fine to take – even though the divergence didn’t work out

Question for Charlie: When trading off the hourly timeframe would he trade a divergence in the early evening (when price seems to drift sideways)?

Gold DST Short – 9 Feb 2017

Account Risk: 0.5%
Short:(1x & 2x) @ 1241.5
Stop: @ 1247.1
T1: 1x @ 1230 (2x RR)
T2: 2x @ 1217 (4x RR)
Mindset: 🙂 Doubt it’ll work out, but happy to pay for the opportunity.

Update 1 – T1 Hit – 8 Feb
Update 2 – Closed the trade – 9 Feb

I’ve been routinely checking the markets for potential set ups and saw this on the Daily chart which looked like a set up was potentially building to get short on Gold. It looked like price was also running into a cluster of resistance which meant that any trade could well not work out, moving higher and hitting a stop.

Daily Chart

Gold Daily Chart – 06 Feb. Divergence setting up?

Weekly Chart

Gold Weekly Chart – 6 Feb. Resistance levels above.

The Daily set up didn’t materialise – price went higher – but it did develop on the 4H chart.

Four Hour Chart

When I checked this chart (a couple of days later), price had already closed inside the bands and moved higher so I had a nice level to get short with a marginal divergence.

Gold 4H Chart – 9 Feb. A marginal divergence has set up.

I doubt this trade will work out given:

  • The four or five resistance levels slightly above price
  • Gold is spikey as hell and likes to test levels

For now, the trade is on. Short @ 1241.5. Two positions: one small, one medium. My plan is to run the small position to the trend line (near the 21MA) and the bigger position to the 55MA, which hasn’t been tested for a while. The idea with this is the first target will cover some of my risk if price doesn’t get down to the 55MA before moving higher.

Slight deviation from my normal approach but the trend channel is pretty clear and makes for a good target as it’s slightly further than the 21MA.

Update – T1 Hit – 9 Feb 2017

Price broke down almost straight after I placed the trade. Very lucky with the timing!

My first target got hit pretty quick. Now running the rest to the 55MA. 56 pips banked, albeit at a tiny position.

Update – T2 Hit – 10 Feb 2017

My second target was hit early this morning. BUT, I wasn’t up in time to move my limit order higher (to track the 55MA) so I didn’t get filled! Ops. As the market has already tested the MA I just closed my position when I got to work.

Final Gold 4H Chart – 9 Feb. Not the best execution but an OK trade.

Pretty poor mistake. Gave back 40 odd pips! Sloppy.

The good thing is, I didn’t get stressed and rush about to close my position. I kept it together 🙂 It’s another lesson learnt, set alerts ahead of your targets when you’re not going to be around. I wonder how I would’ve been following a string of losing trades? (Would probably need to upgrade that gif!)

Final RR was 2x and 2.9x (should’ve been 3.5x!!!) It’s good to be closing some 2x+ RR trades though.

What was good about this trade was the better entry allowed me to up the position size without risking more money. So I’m happy enough with the trade.

EURUSD DST Short – 1 Feb 2017

Acc Risk: 0.5%
Sell: 1x @ 1.0781
Stop: 1x @ 1.0832 (51 pips)
T1: 1x @ 1.0681 (100 pips, 2x R:R)
Mindset: 😐 Not too confident

Update 1 – Post NFP (Still in the trade) – 03 Feb
Update 2 – Moving my target 😐 (still in the trade) – 05 Feb
Update 3 – Target hit – 05 Feb

Spotted a pretty standard divergence the other night so took a position, I shorted on the open of the next 4 hourly bar @ 1.0781. Aiming at a 2x reward to risk. I was looking to add an additional position at the upper band but cancelled the order because I wasn’t comfortable with the full position size. I think this is mainly down to not having much trade history and building my confidence.

The support areas on the higher timeframes are moving averages which are pretty soft levels of support (I assume everyone has slightly different MA chart settings (e.g. exponential, simple, 20 or 21 etc etc). The trend is still up and hasn’t really shown any topping price action to me (spikes higher, collection of dojis or flattening of the trend).

For my target I’m aiming for the 100MA. It has already been tested but I’m only looking for a retest because I’m not feeling confident about the trade. I wonder if in hindsight I should’ve aimed for more.

Here’s the set up (red comments are points against)

4H Chart – The Set up

Daily Chart

Weekly Chart

Post NFP Update (still in the trade) – 03 Feb

Leading up to NFP the target was looking like a dead cert. The NFP was positive for the dollar but earnings and unemployment weren’t so the picture was mixed. The Euro has since rallied higher and price action is looking like bullish for now.

It made me go over the higher timeframes just to revalidate where I think we are (I didn’t do this properly before – broke my trade plan!)

Monthly Chart – 03 Feb

I redrew my trend line going back to 2000 and to me it looks like we’ve broken it and are doing the kiss goodbye. Trendlines are very flaky though, like elliot waves it is all down to interpretation. Someone could well have drawn that as support. However that’s how I see it. I can easily imagine a monthly roll-over and a bullish divergence setting up.

Weekly Chart – 03 Feb

More of the same just zoomed in. Green line is my current short @ 1.0781.

4H Chart – 03 Feb

Green line is my short @ 1.0781, red the stop @ 1.0840 and blue the target @ 1.07.

Price didn’t make it down to my target and for now looks bullish to me. We’ll see how next week works out. I can see a marginal new high on the cards with potentially a double divergence setting up. So might get stopped out and look to be shorting this again.

I’m glad to be trading a system with some stats behind it so I still take trades rather than talk myself out of positions. Even if I am wrong I will have got some experience out of it.

One thing that frustrates me about this trade is that using a moving average as a target murders the RR. Is there a point which I should just aim for a fixed RR? Perhaps as long as I average min 1x RR overall that is fine? One to ask Charlie.

Moving my target 😐 (still in the trade) – 05 Feb

Just a quick update, logged on to ETX this morning to tend to my limit orders, and noticed that I’m now moving my target to Friday’s prior low.

Getting frustrated moving my MA target to previous lows.

I know this is the system, but it’s frustrating to see. During back testing I did notice that often the exits weren’t great RR when targeting bigger MAs. Not always the case but I wonder if after a while the RR goes below 1 it’s just better to lock it in at 1 RR and wait for the target to be hit? Question for Charlie.

Target hit – 05 Feb

Not long after moaning about my target creeping up, it got hit. Over the weekend, I took some time to review the charts and I could see more upside easily following through, but this morning opened down and the target got hit around lunchtime. Here’s the final trade.

FInal trade, target hit at 1.0712.

I’ll take some time to digest how I felt during this trade, I wasn’t super confident about it to start with, so feel lucky that it worked out. Especially after the NFP results. It looks pretty textbook now – so I should be happy.

Looking again at the chart, I noticed the divergence goes back further. I didn’t spot when I placed the trade, and in hindsight it might’ve been better to take two positions and run the 2nd to the 200MA? We’ll see how this pans out.

Gold DST Short – 23 Jan 2017

Acc Risk: 0.5%
Sell: 2x @ 1212.6
Stop: 2x @ 1221.6 (90 pips)
T1: 1x @ 1206.3 (96 pips, 1x R:R)
T2: 1x @ 1187 (256 pips, 2.6x R:R)

Update – T1 hit – 25 Jan
Update – T2 hit – 25 Jan

Saw this set up on Gold doing some back-testing. I doubt it will work out given the MACD divergence is a step down and the Daily and Weekly charts both have moving average targets nearby @ 1230. However, I’m trading the set ups I see, trusting in the probabilities from back-testing. Will post an update once I see what’s happened.

4H Chart – The Set up

Daily Chart

Weekly Chart

Update #1 – 25 Jan

First target has been hit, second target still a way away but rising which is skewing the RR. The T1 ended up being a sub 1x RR. Something to test in future is whether it would be better to go for a static target such as the prior high/low?

One thing I have noticed is how the divergence is now setting up to go long. It’s a different kind of divergence to the pure DST divergences I’ve back-tested so I won’t trade it. But I suspect if we get a close back inside the bands there’s a reasonable chance the T2 won’t get hit.

DST Update – XAUUSD 4H Short – 25 Jan

Update #2 – 25 Jan

The candlestick didn’t close inside the bands and the second target got hit shortly after T1 was hit, with a nice move down. Ended up being a 196 pip move (2.1x RR trade). Not bad, I’m quite lucky really that price did move down to my target relatively quickly, given the MA was creeping up.

Gold DST Trade 25 Jan 2017. T2 hit nicely, order was just ahead of the 100 MA.

Trade Review

I spent most of the time thinking this wouldn’t really work out, so I’m glad I ignored my inner doubt 🙂 The trade was actually a pretty clean trade in the end. I think if the higher timeframes had been aligned I would’ve been happier to take the trade.

My position size was really small and I’m frustrated that it didn’t really win me much considering it was a few hundred pips. Next time I think I’ll up it to 1%.

Looking at the chart now, Gold found support at 1180 and it looks to me like it could set up for a retest with divergence to go long at 1170-1180, we’ll see. (That would coincide with the lower band on the weekly chart.)

Gold 4H Chart – 30 Jan. Looking for the next set up.

EURUSD Trade – 23 Nov 2016

Well this is a first, I just got stopped out almost immediately after I placed my swing trade!

Er what just happened!?

My timing couldn’t have been much better! I was writing this update and a move happened within minutes of placing the trades. Not clear what triggered it – expected news wasn’t counter to my position. Coincidence I guess, I’m not going to dwell on it, this is a probability game.

Well, anyway, here was what I was looking at (I still think it is valid, so I will continue to look for another opportunity) DST trades can take a few attempts to get the turn you are looking for.

Long EURUSD 2x @ 1.0618, Stop @ 1.0559 (59 pips), Targets T1 @ 1.0735 (117 pips) & T2 @ 1.0854 (236 pips)

I actually prefer this DST set up to my gold trade yesterday but it does double my exposure to the dollar which is strong at the moment, so both trades are counter trend. I can see multiple attempts to get in on this trade if it does work out.

To recap my thinking …


We’ve run into trend line support and although we’ve overshot, trendlines aren’t the most concrete of support levels as they are so subjective to the trader drawing them.

EURUSD Monthly Chart - 23 Nov 2016


We’ve got divergence from the start of 2016 to today. Again on the trend line (slight overshoot). Everything else is looking pretty bearish but I guess it would on the bigger timeframes.

EURUSD Weekly - 23 Nov 2016


We’ve got marginal divergence on the MACD but price is well down from it’s prior low and we’ve potentially started to turn around closing inside the bands.

One point against is that we haven’t technically closed inside the bands with an up bar. However, my backtesting has told me it’s better to be in a market then get a perfect entry.

The MACD will ultimately move lower but the entry now has divergence so we’re good to go.

EURUSD Daily Chart - 23 Nov 2016

4 Hourly

There’s a good looking divergence but it’s happened a day or so ago. However, other than hitting the 21EMA, price hasn’t really done anything and given the divergence setting up on the higher timeframes I think we should be expecting a bigger move higher. So I’ve allowed the entry.

EURUSD 4H Chart - 23 Nov 2016

My overall exposure with my other Gold trade is 1%.

Lessons for next time

Should probably be more purist about my DST entries.

The 4H DST had already happened – the 21EMA had been previously test – and the Daily DST hadn’t quite set up as we had a down bar close inside the bands not an up bar. So I was really in no man’s land I suppose with my entry. I was pretty excited about the set up too – should’ve taken a moment to think it through – I was in a rush (in the middle of a workshop) so just went for it.

Also on second thoughts, the Daily MACD was going to move lower than the prior low MACD reading so would’ve confirmed the move lower. So technically not a divergence?!

I also had double exposure to the dollar – the total risk was still around 1% of my total account so you could argue it was more sensible to split that 1% across two markets rather than having 1% risk in just one market.