I was going to write about a trade from the morning, but as I learnt how to trade the morning from T2W, I feel it would be a bit pointless to explain things which are so eloquently put around the forum.
I never traded the US session much at all until December, so I'm still pretty new to it and it's a rather different beast to the London open (where my previous experience mainly lies). I felt it would be better to pick a trade from this period, I think readers will get more out of it, and I'm sure any feedback will be more useful to me. I realise this is rather long, but it is all important to my decision making, so I am guessing should be included.
With every trade, much like with trading as a whole, the first thing to decide is what you want to get out of it. If you want to make a million in a day trading from a score (£20 for our international friends) , it's probably best to reconsider. Luckily, as I'm doing this competition (all for the glory of T2W of course!), my goal is already set before me without me having to make any major decisions.
Today I want to make $5,244 on this demo account before the next update (anytime Monday). I could attempt it Monday morning, but I don't want it looming over the weekend, so that's the goal, $5,224, 25 pips is generally my target (personal reasons for this). Basic maths gives me that I want 25 pips with 21 lots, and then pay $6 in spreads, simples.
I am going to collate my thoughts, trade until I'm done, and then pick the most interesting trade (you certainly don't want to read about me paying the spread).
Trades, I think for most traders, are set into motion quite a while before entry. What I saw yesterday, last week, and last year will to some extent, effect what I do today. This is one of the reasons I think getting back into trading after a break is hard, I at least, need to, as Sanka would say "Feel the rhythm! Feel the rhyme!". This is also my excuse as to why I have thoughts from hours before the trade in question, they're important!
99% of my trades are on eur/usd. I occasionally deviate, but I like the pseudo reserve/reserve pair. She's generally quite kind to me. My thoughts of late are that we're starting to see people want a bit more risk (lower $), and that China has been a bit shaken by the crisis and is trying to diversify into Euros. These thoughts have little to do with my decisions today though. On the other hand, the Euro is currently like watching a slow train wreck.
First thing first: What day is it?
Now I know some of you like to party, but it's more than just forgetting which day it is. Mondays are full of fun from weekend events, there's "Turnaround Tuesday", and Friday (TODAY!) often seems profit taking. It's definitely something to be aware of.
Next thing is to load up a calendar and have a look at the news. Sterling had sales which was rather bad, and mortgages which weren't too good. CAD news was a bit more chipper than usual (must be a national trend!). While I'm not trading these currencies, it's good to look at them,it helps give a picture of where the money is going, what market expectations are. Everything is linked, so everything must be observed. The eur news out of Germany (re: important country), was better, but it didn't have the impact it's known for. Germany isn't the worry in Europe. There are no major holidays today, with that, to the charts!
Even though I trade mainly off the m5 chart, I look at most charts. If you have a good idea what's going to happen in the next few hours, you can sometimes derive from that what will happen on lower time frames. Obviously there's also levels etc which are easier to see. So what do we see today? (you can see from the charts, this was done around half 1)
Daily:
Well, last two days we've broken above December's high and then closed below it. We are currently, once again, above it. It has been acting as an important level since mid November, when it was a bounce off some conjestion in September. It certainly looks like it's breaking for a move up.
4h:
We can see that the 12pm bars (11am GMT) are where we've had highs of the day, with it being sold off in the afternoon. we do however, now have a close above the level, and instead of a sell off we're still looking north, while not breaking the high yet.
1h:
We can see that the highs of the last two days are now acting as support (resistance becomes support), this is the 1.3515 level.
This gives me a bullish bias entering the session. It certainly does not mean I will buy blindly, and doesn't even mean I won't sell, but breaks of highs will be preferred to breaks of lows. Some might infer that this means breaks of highs need less confirmation, and thus that I would be getting in earlier on breaks of highs, this is not the case, and is an incorrect leap of logic. If we recall, the target is fixed, my bullish bias is that moves north will be larger than moves south, meaning I can actually afford to get in later.
I decided the best way to explain the trade was to write down my thoughts throughout the day, these are the ones before and during the trade, I would suggest reading through & looking at 5m or 15m chart as that's what I was doing:
14:40 Currently there are some nice swings on the 5m chart, we're consolidating, but highs and lows are being clearly defined. I am wary of a break above aforementioned 1.335 as there are a few long tails above from the morning, and I suspect we could turn around once again, and a move to be left until next week.
14:49 Varengold updates.
15:12 look at all those tails on m15, pretty certain we're long now, just need the entry, spike down or on a break, I'm not fussy....geez, I'm literally typing my thoughts now....bacon.
15:18 getting in around 1.3550 would be nice (long)... In at 1.3550, didn't expect it that quick still valid though. Hitting the 5m/15m trendline. Stop @ 1.3540
15:20 Stop at 40, would like to get out before then though. Target is 85, because I have lost 10 so far (oh noes!)
15:22 Gotto let this breath, going to update my spreadsheets (some guys have all the fun).
15:24 Forgot the screencap! Taken one now. I bought at 50 on the 15:15 bar, it's low was 49 at the time if anyone wants to know.
15:27, approaching new highs, now in a slight sell off, this hopefully brings in buyers for further move North.
15:29 pullback all the way to entry, but sticking in, should at least test highs again.
15:43 hanging around this level is a good sign, we're not just spiking up and falling down, seem to have gained ground and holding it for now, hopefully building momentum.
15:45 15m chart looking very bullish IMO
15:52 been away making a cuppa, and we're out. Now to lose $6 and put this in a nice format.
After-fact Remarks (All the above was before/during the trade)
Risk: 10 pips (inc spread)
"Dante Risk": 5 pips (inc spread)
Return on Risk 3.5 (7 using Dante Risk
)
So far gone 10 pips further, trend line has been crossed, but not properly broken.
General:
Trend up, bought on a large spike down, jobs a good un.
As to the other trades of the day, they were pretty boring and nothing to speak of, just playing around in the chop on the off chance really.
Questions?
