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Trading Price Action on EURUSD Spot FX


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Trading Price Action on EURUSD Spot FX

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  #1 (permalink)
Melbourne Australia
 
 
Posts: 24 since Oct 2013
Thanks: 7 given, 9 received

After a false start attempting to learn to trade by SIM trading GC on 5min charts, I have discovered the folly of my ways. Here is the new plan. Hopefully it's a little more sensible this time round.

Instrument: EURUSD Spot FX
Timeframe: 15min charts
Approach: Price Action
Size: Spot FX Micro-lots ($0.10/pip)

I'm trading a tiny live account.

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  #3 (permalink)
Melbourne Australia
 
 
Posts: 24 since Oct 2013
Thanks: 7 given, 9 received




Timezone is Australian GMT+11.

Trade 1
I waited all day for this one. Price was in a tight range. Placed stop entries on both ends of the range with SL on opposite sides of the range.

Hit Long Stop @1.37510 with SL on the other end of the range @1.37321.

Price tested Pivot Point and doubled back.

4hr charts show longer term bearish trend. My hunch was that this was another one of those temporary spikes like the one circled in black. Also, there was a bit of "noise" around the Pivot Point earlier on the chart (~22:30). I promptly closed out the position @1.37621 for 11.1pip profit.

Trade 2
Euphoric from what I thought to be a decent trade, I decided I'd try to ride the spike down. Went short @1.37603 with SL right on the tip of the spike @1.37677. Price was favourable for a bit before SL was taken out for a 7.4pip loss. Expectation was for price to return to pre-spike level, or better, resume bear trend.

Two things I would've done differently.
1. Not taken the trade. The trade was taken on a whim. It felt rushed, and was a bit of a gamble to "reward myself".
2. The trade could've worked if I'd place the SL slightly further above the spike. Longer term trend was bearish. It had a good chance of working out. Instead I gave back a good chunk of my winnings.

I swear I got taken out by a stop hunter. What an experience!

+3.7 pips

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  #4 (permalink)
Newcastle, Australia
 
Experience: Intermediate
Platform: Multicharts 8 - Full Version
Broker: IB
Trading: SPI,FTSE100, 6E, 6A
 
Posts: 285 since Oct 2010
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Good to see a fellow aussie.
Good luck.

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  #5 (permalink)
Melbourne Australia
 
 
Posts: 24 since Oct 2013
Thanks: 7 given, 9 received



Woke up this morning to an emerging ascending triangle with resistance around previous day's PP. Marked up the formation and the Double Top in anticipation for a downward breakout.

Was out for an appointment when breakout occurred. When I got back, had to think really hard before deciding to go short @1.37603 when I did. Stop Loss was just above the PP where resistance held, so risking around 27pips.

I didn't have a exit in mind. It was a clear bear trend on the higher timeframe, so I let it break past the 1.3700 level, and test S1.

Started to get a little nervous in the evening when a minor uptrend began to form with a couple of Higher Lows, breaching the 1.3700 level, the previous resistance @1.3710 and tipped my position in to negative a couple of times. I finally exited where I thought the next Higher Low might form for 11pip profit.

Reasons to remain short:
1. Bear trend on the 1hr timeframe

Reasons to exit my short position:
1. I was late to get in. Would've felt more comfortable with a tighter stop if I'd gotten in earlier.
2. The higher lows, breaching of key levels 1.3700, 1.3710 creeped me out.
3. Support at S1 might hold.
4. I was afraid of the possibility of a losing trade.

If I had just waited another 10 mins or so, the price would've broke out under S1 and I'd be sitting comfortably on an extra 20pips as I'm posting this.

Then again, if I'd waited another 10mins, I might've been in negative?

What did I miss? Was it a good enough decision to exit, or were there signals that I should've picked up pointing to the downward breakout after I exited the short?

+11pips

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  #6 (permalink)
Melbourne Australia
 
 
Posts: 24 since Oct 2013
Thanks: 7 given, 9 received



Feeling pretty bad about myself for missing the bear trend yesterday. If I'd just stayed in, I'd be more that 130pips up with more to go.

Things I need to watch out for today:
1. Not try to "redeem" my trade from yesterday.
2. Not try to force a trade.
3. Remain objective and trade as though yesterday's dud didn't happen.

Upon further reflection, I think my difficulty in staying in came from the conflict I had looking at 3 different timeframes: 1hr, 15m, 5m.

1hr had a clear bear trend. 15m was showing a tiny bit of hesitation that presented itself as a pretty established bull channel on the 5m.

My mistake was placing too much weight on the 5m formation and letting it override what I was seeing (or rather not seeing) on the higher timeframes. I should have done the exact opposite and prioritized from high to low time frames.

Obviously fear came into play an place a frickin magnifying glass on the 5m threat of the price going against me - that and my general "distrust" of higher time frames by their virtue of requiring larger stop losses from me.

Wish me luck!

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  #7 (permalink)
Melbourne Australia
 
 
Posts: 24 since Oct 2013
Thanks: 7 given, 9 received

Some improvements I've made to my terminal that has had a positive effect so far.

1. Turned off the 5min charts. Instead of 1hr, 15m, 5m, I now only have 1hr and 15m up.
2. Turned off my running Account P/L. Now I've only got an Open Positions tab, and focusing on pips rather than $ value.

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  #8 (permalink)
Legendary Data Wizard!!!
Cincinnati Ohio
 
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isaacsu View Post
[IMG]

Obviously fear came into play an place a frickin magnifying glass on the 5m threat of the price going against me - that and my general "distrust" of higher time frames by their virtue of requiring larger stop losses from me.


Hi @isaacsu

Interesting view on distrusting higher time frames. If I might I would like to provide a different perspective. If you take 10 trades during the week on a 5 min chart with a 15 tick stop versus taking 1 trade during the week on a daily chart with a 150 tick stop then you are still risking 150 ticks in either trading scenario. Honestly the biggest difference between low time frame and a high time frame is how many trade setups there are.

As a day trader myself who is now swing trading I can tell you fewer setups are better.. less stress and less chance of giving back what you have made.

Robert

My view of the Euro this week: One good entry at 1.3775 ish with a 75 tick stop and a target of 1.3460 to 1.3500


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  #9 (permalink)
Newcastle, Australia
 
Experience: Intermediate
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Trading: SPI,FTSE100, 6E, 6A
 
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Silver Dragon View Post
Hi @isaacsu

Interesting view on distrusting higher time frames. If I might I would like to provide a different perspective. If you take 10 trades during the week on a 5 min chart with a 15 tick stop versus taking 1 trade during the week on a daily chart with a 150 tick stop then you are still risking 150 ticks in either trading scenario. Honestly the biggest difference between low time frame and a high time frame is how many trade setups there are.

As a day trader myself who is now swing trading I can tell you fewer setups are better.. less stress and less chance of giving back what you have made.

Robert

My view of the Euro this week: One good entry at 1.3775 ish with a 75 tick stop and a target of 1.3460 to 1.3500


True about the combined risk but...
1 trade a week, get it wrong and your 100% losers, as opposed to 10 smaller trades that say have a 50% winners and say a 1:2 risk to reward and your in front.
As Van Tharpe says, it is better to take lot's of smaller trades then pin your hopes on one bigger trade.
Even on the shorter time frames, people always want huge profits. Isn't it better to take lots of smaller profits with higher percentage winners than take the occasional big trade a) because its big causes more stress, b) due to the bigger time frame it has a lower setup frequency, c) has higher risk when you aren't there to manage it.

Neil.

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  #10 (permalink)
Melbourne Australia
 
 
Posts: 24 since Oct 2013
Thanks: 7 given, 9 received



Silver Dragon View Post

Interesting view on distrusting higher time frames. If I might I would like to provide a different perspective. If you take 10 trades during the week on a 5 min chart with a 15 tick stop versus taking 1 trade during the week on a daily chart with a 150 tick stop then you are still risking 150 ticks in either trading scenario. Honestly the biggest difference between low time frame and a high time frame is how many trade setups there are.

As a day trader myself who is now swing trading I can tell you fewer setups are better.. less stress and less chance of giving back what you have made.


NW27 View Post
True about the combined risk but...
1 trade a week, get it wrong and your 100% losers, as opposed to 10 smaller trades that say have a 50% winners and say a 1:2 risk to reward and your in front.
As Van Tharpe says, it is better to take lot's of smaller trades then pin your hopes on one bigger trade.
Even on the shorter time frames, people always want huge profits. Isn't it better to take lots of smaller profits with higher percentage winners than take the occasional big trade a) because its big causes more stress, b) due to the bigger time frame it has a lower setup frequency, c) has higher risk when you aren't there to manage it.

Awesome discussion. Here's something I've started to discover about position sizes and stop losses. Previously, I attempted to "take lots of smaller trades" on GC with crazy tight SL (3 ticks). Turns out, because GC is pretty noisy, you can't get any meaningful movement out of 3 ticks (or even 30 ticks for that matter according to other more exprienced members on futures.io (formerly BMT)).

This means there is a pretty high chance that smaller trades with tight SLs are going to be stopped out, so 50% winners is going to be very hard to achieve.

Rather than running tight stops to limit exposure, I put on smaller sizes with larger stops. Instead of a 1 lot position with a 3 tick SL, I would run a 0.01 lot with a 300 tick SL.

Furthermore, trades take time to think through, plan and execute. So especially for a beginner like me, I've found taking 10x the time to plan one quality trade far more profitable than taking 10 small frequent half-baked trades. I've also been very intentional about doing a double, triple, quadruple take before I enter a trade - more often than not, there's something that I've missed.

So smaller sizes, wider stops, meaningful movement, quality trades.

Just a beginner's 2 cents.

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