Category Archives: Trades

AUDNZD DST Set up – 14 Mar

Account Risk: 0.5%
Long: 2x 1.0936
Stop: 1.0969 (33 pips)
Tgt 1: 1.0875, 4H 50MA (61 pips)
Mindset: Reluctant

Update 1 – Stopped out – 15 Mar

This sums up how I’m feeling about this.

Ugh. I guess I should take this trade then.

I didn’t really want to take this trade, the AUDUSD and NZDUSD are very similar in price action and the AUDNZD is low volatility. However, I’m about trading set ups that I see rather than trying to be clever with my opinion and entries.

It’s another thing I’ve been wondering for a while – when looking at a trade you ideally want to be trading a weak vs a strong currency. The AUD and NZD just seem to be very similar and price action between the two seems marginal.

Here’s the set up …

4H chart setup

AUDNZD 4H Chart – 13 Mar

It’s actually a nice entry – price has diverged, inside the bands and is now testing the upper band. So I am happy with the entry.

I’ve looked at the higher timeframes and there’s nothing to suggest to me that price would stop it’s trend higher with maybe the exception of the month which has run into the 50MA. However MAs are soft targets in my mind. Price often chops around a MA.

Monthly chart

AUDNZD Monthly Chart – 13 Mar

Will see how it plays out – at least the entry is good.

Update – Stopped out – 15 Mar

Just got stopped out of this trade. Price moved higher off the back of the Kiwi Q/Q GDP figures which took me out. The expectation was a growth of 0.7%, the actual was 0.4% – quite a big miss. After being taken out price then continued to move higher for a few bars.

AUDNZD 4H Chart – 16 Mar. Was my slope of hope 🙂

Frustratingly I see I’ve missed another entry which looks like it might work out. This goes back to my trading plan. Not being consistent enough with my trading time. If I’m not routinely checking the charts at set times I miss trades/opportunities. At the moment I’m just catching the losing trades!

Need to add this to my trading plan. I might try a different timeframe that suits my day-to-day.

EURAUD DST Short – 10 Mar

Account Risk: 0.6%
Long: 2x 1.4096
Stop: 1.4138 (42 pips)
Tgt 1: 1.4026, 4H 20MA (70 pips, 1.66RR)
Tgt 2: 1.3930, 4H 50MA (166 pips, 3.95RR)
Mindset: A little unsure, as it’s NFP day, what effect we might see

Update #1 – Stopped out – 10 Mar
Update #2 – MA distortion – 13 Mar

A little unsure about this DST set up, the € is setting up short on a few markets and this one looks like the best set up to me. It’s NFP day so it’s nice to be in a market that shouldn’t be affected, however if the € reacts well I’m guessing it’ll follow through on to this market.

The AUD$ also looks to be bottoming out against the $. At the back of my mind is the question of whether I’m shorting the wrong pair. In hindsight, should I be shorting the EURJPY instead?

I’m currently long the EURUSD too and the price action has been pretty good so I’m hoping for a move higher on that market. So maybe this is stupid trade to take – who knows, not me that’s for sure.

Here’s the set up.

4H Chart – the set up

EURAUD 4H Chart – 10 Mar

It’s not perfect, price seems to have drifted into the bands, but the setup occurred overnight and I’m all about trading what I see.

The daily and weekly charts look bullish to me. So I set up my targets for the 20 and 50 MA. I noticed that the 500MA is nearby (like my AUDUSD set up which I didn’t take) but MAs often get air-kissed so I may or may not get stopped out.

EURAUD Position – 10 Mar

Update 1 – Stopped out – 10 Mar

Got stopped out after NFP, the € was strong and jumped up to the 500MA. I don’t think there’s much more to say on the trade. Win some, lose some.

One thing I would say is I got pretty tense pre-NFP and I really have no idea why. I guess I had a lot of positions on (for me)? My FTSE trade has come right against me – hopefully this is just a swing up to go lower – higher interest rates are bad for equities so maybe the Fed rate decision might ripple through to the FTSE?

EURAUD 4H – 10 Mar – end of day

Update 2 – MA Distortion – 13 Mar

Just wanted to check back on this and see how price action developed. Although the divergence didn’t work out; as price moved up to test the 500MA; it did work itself lower. I’ll keep an eye on this just to see how it develops further.

EURAUD 4H Chart – 13 Mar. The lines show my entry (blue), stop (red) and targets (green).

I notice this kind of divergence distortion on my monthly reviews and I think it could be included in divergence set ups (as marginals to allow). I’ll see how it develops over the next few months.

Update 3 – MA Distortion cont’d

Just another note on the trade, it did make target. I appreciate this is just anecdotal evidence at the moment, but I will keep an eye on this pattern in the future too. Here’s the final chart.

EURAUD 4H Chart – 16 Mar. Lines were my ORIGINAL targets.

GBPUSD DST Long – 9 Mar

Account Risk: 0.4%
Long: 2x 1.2160
Stop: 1.2110 (50 pips)
Tgt 1: 1.2285, 4H 50MA (125 pips)
Tgt 2: 1.2376, 4H 100MA (189 pips)
Mindset: Not too smart, given the upcoming news events

Update 1: Added to position – 10 Mar
Update 2: Closed first unit – 13 Mar
Update 3: Stopped out – 14 Mar
Update 4: Missed a set up through lack of routine – 14 Mar
Conclusions

This pretty well sums up how I feel about taking this trade! In a word; crazy.

It’s my second crack at this. Last time I was in two minds about taking a long GBPUSD, this time the indecision is worse! I saw this tweet yesterday about next week’s fed rate decision.

100% odds of a rate hike?

And the ADP figures out yesterday were strong, a new high since Sept 16. So in my monkey brain it feels totally stupid. Surely it’s an odds on certain that the GBPUSD is heading lower. But this is all known news now, so I just wonder whether this is all priced in (and nothing is 100% certain). I can’t say for sure, but I’ve decided to go in with a smaller position size and find out. So yeah, Wile E. Coyote pretty well sums up how I feel.

Here’s my trade:

GBPUSD 4H Chart – 9 Mar

I put my stop the other side of the monthly S2. Targets are quite a bit greedy again, T1 is the 50MA and T2 is the 100MA despite the 20MA not being tested for a while, it has been previously tested 2 times before. So I’m going for a bigger move. My analysis says the GBPUSD could go much higher, but I want to trade the strategy as designed. There’s no divergence on the daily chart.

Added to position – 10 Mar

Account Risk: 0.6%
Long: 3x 1.2160
Stop: 1.2110 (50 pips)
Tgt 1: 1.2243, 4H 50MA (83 pips, 1.66 RR)
Tgt 2: 1.2351, 4H 100MA (191 pips, 3.82RR)
Tgt 3: 1.2417, 4H 500MA (257 pips, 5.14RR)
Mindset: Uncomfortable, still experiencing the emotional rollercoaster, but coping with the position.

I’ve survived the NFP results and price didn’t budge much on the GBPUSD, however my Euro position did get to it’s ambitious target so I was able to add to my GBPUSD position to bring it up to the target £50 risk level and not overly expose me to the Dollar.

Part of this decision was the rising MACD on the hourly chart – showing a double divergence. It might be a triple divergence but there’s quite a bit of price action going back quite far.

GBPUSD 1h Chart – 10 Mar

Given the Fed rate decision due next week – I’m not expect this to do much. Ideally it would trend up and give me some margin for a retrace if fed does decide to raise rates.

Here’s the inflation rate and interest table for interest.

Trading Economics Interest Rates and Inflation numbers

Here’s the CME markets prediction of a rate rise on Weds. Interestingly the bulk of the expectation is for 0.75 – 1% increase! Seems a bit bold to me, I wonder if we are due a disappointment and it’ll be a smaller hike 0.25%.

CME Fed Rate Decision Odds

Hit my first target – 13 Mar

Price ran up to my first target this morning, fortunately I saw it so could close my position. I didn’t update my targets overnight so I had to manually close my position. Not great – again poor routine. When I’m at home I want to be focussed on family, so I need to sort out my routine away from home and work, so that I am free to trade when I need to. I’m thinking I’ll drop into the local library on the way home from work and try and drop into a cafe on the way to work.

Stopped out – 14 Mar

GBPUSD 4H Chart – 14 Mar. Green line was my original target, I exited slightly earlier.

Update 4 – Missed a set up through lack of routine – 14 Mar

Just a quick one, I was looking at the charts late last night scanning for set ups and saw this on the GBPUSD.

GBPUSD 4H Chart – 14 Mar. DST set up – double divergence ahead of Fed Rate Decision.

I decided not to take the trade because it was late and I was wrecked from house renovation plans, the target didn’t look that juicy and the fed rate decision was tomorrow and I was nervous (probably the biggest factor). I felt it would probably end up being a loser but I should look at it again tomorrow after some sleep and make a decision.

Well it popped higher at about 6am (of course it did) and it would’ve made for a quick winner straight-through the 50MA. Previously tested though. The 100MA is still in sight (it’s a double divergence now!) so I am not setting alerts for pull-backs into my range to get long.

GBPUSD 4H Chart – 15 Mar. DST Set up has popped higher this morning.

Charlie said to me on our last call – forget about the news, you didn’t back test this with knowledge of when news was due. Expected news is also priced into the market – so perhaps this trade would be a win win what ever happens? No rate hike (GBP goes higher – much higher), rate hike as expected (short term volatility and then a pop higher for the GBP), rate hike smaller than expected (GBP goes higher).

Everything is always clearer in hindsight!

Conclusion

I don’t like to make changes on the back of one trade, however I’ve been thinking a couple of things for a few weeks now:

My position size is too inconsistent. I’m downsizing on trades that win and trading fuller size on trades that lose. From now on I’ll aim for all trades to be 0.7% risk, until I get some consistency – no stress, win or lose.
My targets aren’t realistic. I split my entries but I think I’m often looking for too much out of my trade targets, only closing a small position at my first target. I think this should be the other way around (i.e. close the bulk of my position and try and run a smaller position.)
My stops are too big. I’ve always traded with larger stops however I am thinking it’s actually better to get stopped out and re-enter the market at a better level. Once a winner works out the better entry should help claw back some of the stop losses.

GBPUSD DST Long – 8 Mar

Account Risk: 0.6%
Long: 3x 1.2206
Stop: 1.2149 (57 pips)
Tgt 1: 1.2326, 4H 50MA (121 pips)
Tgt 2: 1.2395, 4H 100MA (189 pips)
Tgt 3: 1.2428, D 20MA (222 pips)
Mindset: Fine – maybe a little greedy

Update #1 – Stopped out – 8 Mar

Was in two minds to take this trade or not. The budget is the following day and the NFP numbers are due out Friday. So I could see some volatility coming into this position and needlessly stopping me out. However, I figured the budget would be a slow news event (as it lasts several hours) and the NFP was still two and a half days away. So I decided to go for it.

I see potential in the GBP to move higher. On my daily scans the GBP is setting up on several pairs. None are quite diverging yet but the GBPUSD has this 4H divergence in play.

4H Chart set up

GBPUSD 4H Chart – 7 Mar

The daily chart also looks really good to me to get long.

Daily Chart

What I like about this chart is the long term double divergence from Jul 16 -> Oct 16 -> Jan 17. Although now doesn’t look like it will set up for a triple, I wonder if price will now retrace to the 76.8% fib level and move higher?

So I decided it was better to be in the trade now, ready for any rallies higher should they occur.

Update 1 – Stopped out – 8 Mar

Well looks like I read this wrong. Price often seems to drift into the bands overnight and for price action to continue where it left off the next day. I don’t have enough trades under my belt to prove it, but I will certainly keep an eye on it.

I’m actually a bit frustrated about this a few things are on my mind:

Should I have set a tighter stop? So I waste less money trying be on a move.
Should I have waited for a better level?
Are all my trades now correlated (EURUSD, FTSE and GBPUSD)?
The chancellor is going to make me pay more tax

I decided to walk away from the computer and meet some friends for lunch. I think this helped me get some perspective on the situation, I’m still keen for another crack at this if the 4H continues to diverge but for now I’m on the side-lines. I can definitely feel the rollercoaster of emotions when I trade, have three positions on unusual for me and I’m not that rock-solid about losing trades yet.

FTSE DST Short – 6 Mar

Account Risk: 0.3% (looking to increase leverage to 1%)
Short: 1x 7355 & 2x 7362 (order)
Stop: 7408 (1x 53 pips & 2x 46 pips)
Tgt 1: 7225, D 50MA (130 pips 2.4 RR)
Tgt 2: 7113, W 21MA (242 pips 4.5 RR)
Tgt 3: 6773, W 50MA & M 21MA (582 pips 10.9 RR)
Mindset: A little uneasy – worried about missing out on the full position.

Update #1 – Second part of my position has triggered – 6 Mar
Update #2 – Stopped out – 16 Mar

This trade has been in the making for a while! The FTSE has broken to new highs and we’ve got a divergence showing on the 4H, Daily and almost the Weekly (Not sure about the monthly yet). There are so many juicy targets as well, I just can’t wait to see how this plays out. I’ve got the feeling this might be one of the better trades of the year for me (just got to play it right!)

The set up is on the daily chart (I’ve entered a little early on the 4H chart)

Daily chart set up

FTSE 100 Daily Chart – 6 Mar

I’ve entered the first portion of my trade at 7355 manually from the 4 hour chart. The remainder will be entered at the upper band. I’d like to be trading more than 3 units but I’m already on the smallest position size with ETX I don’t want to risk more than 1% on this trade right now. Maybe if we had a double or triple divergence I’d feel different.

Weekly chart

FTSE 100 Weekly Chart – 6 Mar

Not quite confirmed but price has moved inside the bands, a decent close under 7340 would confirm the weekly divergence. Monthly chart would set up if we closed under 7255.

This one is a big time wait and see job. It could take weeks to work its way down to my target.

Update 1 – Second part of my position has triggered – 6 Mar

Date: 06 Mar 17
Account Risk: 0.6%
Short: 1x 7355 & 1x 7362
Stop: 7408 (1x 53 pips & 1x 46 pips)
Tgt 1: 7113, W 21MA (242 pips 4.5 RR)
Tgt 2: 6773, W 50MA & M 21MA (582 pips 10.9 RR)
Mindset: Ok for now – waiting for a decent break-down. Not sure about adding to my position now.

The second part of my trade has been triggered now, so my average entry is 7359. I originally wanted to go up to add 2 units to increase the trade size to 1% but if I’m being honest with myself I’m not ready for it. Just not used to it and I’d like to build up some trading mileage and a bigger margin before I up my position size.

So I’m happy to risk £50 per trade for now.

Here’s the set up I’m trading.

FTSE Daily Chart – 6 Mar

I’ve noticed people at work talking about buying shares, I don’t get the impression people are greedy though, just that getting into equities is on their radar – so I can imagine a scenario where price goes higher yet.

The opposite to that though, I can easily see price on the weekly & monthly charts closing inside the bands. If the monthly chart sets up, I may have to move my targets to the monthly 21. At the moment the weekly divergence is in play so my targets are set for the 21 and 50 weekly MA.

Update 2 – Stopped out – 16 Mar

Got stopped out of the trade. Two things surprised me about this:

When the fed raised rates, prices went higher. Higher interest rates are usually bad for equities – debt is more expensive and there’s less money for people to spend on stuff.
How long this trade took to decide anything. Just not been used to that much waiting around!

I have to be honest and say I was disappointed about this stop out. Bruce Lee sums it up pretty well for me.

Down on my luck again

I know I shouldn’t be, but I’ve had a few losers lately, trading costs are adding up and I was hoping this trade would cover those losses. I’m not used to this – probably the first time I’ve experienced it – although I’m covering many markets now and these losers are spread around, so it’s to be expected but it wasn’t what I was planning for March.

Here’s the final chart.

FTSE 100 D Chart – 17 Mar

Looks like we still might get other set ups coming. Gotta keep plugging away. I’m sure I’ll look back on this one day and shake my head in disbelief at how easily up set I was.

EURUSD DST Long – 3 Mar

Account Risk: 1%
Long: 2x 1.0515 & 2x order 1.0505
Stop: 1.0475 (40 pips & 30 pips)
Tgt 1: 1.0556, 4H 50MA (41 pips, 1x RR)
Tgt 2: 1.0655, 4H 200MA (140 pips, 3.36x RR)
Tgt 3: 1.0975, D 200MA (410 pips, 10.25x RR)
Mindset: Optimistic

Update #1 – First Target hit – 6 Mar
Update #2 – Wait and see – 8 Mar
Update #3 – Final Target hit – 10 Mar

I’m about to start building work on the house and so my time is seriously stretched at the moment. It’s not the ideal situation for trading – late nights, lots going on and generally feeling tired. I need to be aware of my stress levels and mindset over the next few weeks. I may have to take a break if my routine isn’t consistent enough.

Anyway, for now the situation is manageable. I saw a EURUSD trade set-up I’d been monitoring on the 4H chart. This trade has been my first opportunity to test out my new position sizing approach. The idea is to scale in to positions at a better price within, and at the edges of, the bands.

General approach is to enter the market with half the position and try and get a fill on the other half at a better price using a market order.

Here’s the set-up on the EURUSD.

4H Chart – set-up chart

EURUSD 4H Chart – 3 Mar

The price action is showing a 4H double divergence. When you add in the daily chart, things get a bit more interesting.

Daily Chart

EURUSD Daily Chart – 3 Mar

We’ve already tested the 100MA and we’re currently on the 61.8% fib retracement (2nd test). Price is also testing the weekly lower band.

Monthly Chart

I wanted to include this too, we are on an ultra-long term trendline of support today (lower blue line).

EURUSD Monthly Chart – 3 Mar

But what caught my eye on this chart was the trend channel break-away. This was a pattern a recall learning ages ago – I have no stats to prove that it works or doesn’t – but the trader I learnt it from said it was a particular favourite of theirs.

Price is in a down-trend channel (red line) but then accelerates away, steepening the trend (dark red line). Price can often retrace that move just as quickly back to the original trend line.

Hopefully the chart mark-up makes sense.

Nothing I can actionably trade, but interesting nonetheless. If my full position is triggered I might be tempted to hold on to the last position for a while.

Executing the trade

With my new approach to position sizing, my charts are very busy! But here’s the trade – I’ve manually opened the first 2 units. I’m using an order for the remaining 2 units.

EURUSD 4H Trade Chart – 3 Mar

Targets are spread across as follows.

1x @ 4H 50MA. This will be the first target to hopefully limit my downside. It’s my alternative to moving my stop.
2x @ 4H 200MA. I thought about the 500 but they are so close I think it is fair to shoot for the 200. The 100 has been tested a few times, so I’m aiming for more pips.
1x @ D 200MA. the 100MA was recently tested on the daily chart, so I’d like to run the last position to the Daily 200MA.

With the orders, stops and limits, my ETX chart looks terrible! I’m glad I’m using two different chart packages so I can keep things clean.

EURUSD 4H ETX Chart – 3 Mar

Update 1 – First Target hit – 3 Mar

Account Risk: 0.4%
Long: 2x 1.0515
Stop: 1.0475 (40 pips)
Tgt 1: Hit @ 1.0556, 4H 50MA (41 pips, 1x RR)
Tgt 2: 1.0655, 4H 200MA (140 pips, 3.36x RR)
Mindset: Not good, not bad

The second half of my position didn’t get triggered before price has moved higher. I’ve been surprised how quickly price has moved. I hit my first target within hours of placing the trade. Feel fortunate to have caught that wave.

For now, I’ve cancelled the remaining long orders and will watch price action.

My final target is still the 200MA. I saw we hit the 500MA this morning and price dropped back sharply. Maybe I’ve been too greedy to go for the 200MA? Time will tell – it’ll probably hit the 200MA at the exact same price level !

EURUSD 4H Chart – 6 Mar

I’d say the trade is break-even, since hitting my target, but I’m paying rolling charges so it might not be when I’m threw!

Update 2 – Wait and see – 8 Mar

I can’t claim not to be a frustrated with this trade, I was quite close to getting my exit but price has drifted away now.

EURUSD 4H Chart – 8 Mar

Following the bounce and the fast move up I thought we might be into a trend change. However since hitting the 500MA price has just slowly ebbed away. I’m starting to think I’d been too greedy going for the 200 over the lower 500MA.

Hard to say, I wonder if we will move down to retest the lows and set up another divergence?! If we did that would be great for another long. Given the news events over the next two days I’m really not sure how to trade this if it does set up. The ECB meeting is today and includes rate decisions (one of the biggest factors of a price move) and forward guidance on the interest rate will move this currency.

The NFP figures are out on Friday too and the ADP figures (which forecast the NFP figures) were a big beat. So price movements could be huge.

I’ve really not decided what to do yet.

Update 3 – Final Target hit – 10 Mar

EURUSD 4H Chart – 10 Mar

My final target has been hit, feel pretty lucky about it now, after my call with Charlie last night he agreed going for the 200 over the 500 was probably too ambitious 🙂

Anyway, I feel pretty lucky about this, price got up there real quick and I my limit order closed me out of the trade. The only frustration was that it wasn’t a full position like intended, just a half size. Makes me wonder if trying to scale into a position is worth it, it would marginally reduce loses but ultimately it would reduce the winners if only half the position gets triggered (hmmmm?)

I’m starting to think that trying to get better entries is probably not worth it. Question for Charlie!

Here’s the final trade.

Account Risk: 0.4%
Long: 2x 1.0515
Stop: 1.0475 (40 pips)
T1 Hit: 1.0556, 4H 50MA (41 pips, 1x RR)
T2 Hit: 1.0635, 4H 200MA (120 pips, 3x RR)

Now this position has closed I can add to my GBPUSD without maxing out my USD exposure, so I’ve added a final position. I wonder if I’m too early on the £ trade as the Fed rate decision is due Weds evening. Hopefully we can get some breathing space on the GBPUSD to handle any shock reactions to the market.

AUDNZD Short – 2 Mar

Account Risk: 0.4%
Short: 1.0740
Stop: 1.0792 (52 pips)
Target: 1.0565 4H 200MA & (likely) Daily 50MA (175 pips, 3.36x RR).
Mindset: OK – A little unsure, expecting a loser soon after my recent run of winners.

Update #1 – Just checking in – 3 Mar
Update #2 – Stopped out – 3 Mar

Saw this short set up during my morning scan. I actually quite like the trade because there are some good correlations on several timeframes and other aussie markets (AUDUSD and GBPAUD) are supporting the story that the aussie is looking weak.

I really want to get a DST set up on the GBPAUD so I’ve only gone for half my planned risk on this trade. This is so my total exposure to the aussie is within 1% account risk.

Here’s the trade:

4H Chart – the set up chart

AUDNZD 4H Chart – 2 Mar

Price has moved marginally higher and closed back inside the bands. (Although price has since gone outside the bands when I took the screenshot!) There’s also a marginal divergence playing out.

However the story of this trade is really on the higher timeframes.

Daily Chart

AUDNZD Daily Chart – 2 Mar

It’s this chart that really got me interested. Price has run into prior resistance, the 500MA and is showing a divergence from the last high on Oct 2016.

I also like the distance of the 500MA and 200MA from each other. When back-testing I often saw scenarios where price would ping-pong between bigger MAs (typical the 50 & 100 or 100 & 200).

Ultimately I’m looking for this chart to go higher to the weekly 200MA (see below) and the golden cross is currently in the making so I’m hoping we’ll get a fall to my target and a nice DST set up so I can get long!

Weekly Chart

AUDNZD Weekly Chart – 2 Mar

The chart shows the 200MA prior near miss, I’m looking for price to test the lower band before moving higher.

Outlook for now

I can see a lot of potential in this trade but I can also see this really kicking me in the balls! The momentum up to this point has been strong and the weekly chart does look good for a run to the 200MA.

It’s a wait and see affair. BTW never did get that long on the GBPAUD, price just flew away. Maybe in a few day’s time we’ll get another opportunity.

I feel like the pound is bottoming out and getting ready to make a resurgence.

Update – just checking in – 3 Mar

As part of my routine, I tend to any open positions at lunchtime. Being optional Friday at work (where everyone seems to work from home) – I also took a bit of time to reanalyse my trade and target. At the moment price is against me but I still see a decent amount of potential in this trade. (I need to be careful here though – I’m worried I’m getting too one-sided in my view.)

Here’s the current price action on the 4H chart. Green line is my entry, red my stop.

AUDNZD 4H Chart – 3 Mar

There’s potential here for a short-term, marginal divergence, to set up on this timeframe. I still won’t increase my position as I’m looking at other markets (long on the GBPAUD for example) but if the divergence does set up and I decide not to trade the GBPAUD, I would consider it.

At one stage the trade was with me by ~50 pips and touched the 50MA; so if we do get a divergence coming in, it would give me more confidence that we would hit my 200MA target. This is particularly true when you see the two prior touches of the 100MA and the proximity of the 50 and 100MA.

Incidentally, the divergence is not there on my ETX broker charts. Something that has confused me before (getting in too early on GBPCAD) but the very recent price action shows a spinning top and shooting star.

AUDNZD 4H ETX Chart – 3 Mar

However the AUDUSD looks to be bottoming and the AUDJPY is looking strong. So it’s a coin flip in my mind.

We’ll have to wait and see – but it’ll be interesting to see how this turns out. I’m feeling level enough to see this go either way.

Update – Stopped out – 3 Mar

Just got stopped out, Friday PM – no great shakes – the divergence is still there on the daily chart so might set up again.

AUDNZD 4H Chart – 6 Mar. Stopped out for a 0.4% loss

In hindsight looking at the aussie and the kiwi against other currencies they are both quite weak at the moment. so I was shorting one weak currency against another, so maybe I should’ve been happy to take the 50MA target.

Again I would’ve liked to have split my position down to scale out of the trade at the 50MA first target and then shoot for my original target 200MA, but I need to grow my account some more to trade like that.

Finally the GBPAUD hasn’t come to the level I need it to, however I can see a divergence setting up on the GBPUSD 4H chart which looks like it could be a good entry.

My daily scans are showing that we have a few set ups in the making on the £. To me the £ is looking like it’s ready to move higher. Same for the €. I wonder if the circus is moving out and the triggering article 50 will be seen as a good thing and we’ll start worrying about stock markets and the US economy? The budget is also this Weds 8th Mar – so may mark a turning point.

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

Conclusion

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

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

Monthly

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

Weekly

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

Daily

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)?