5/6 – NFP Day – a good time to review trades in order to learn!

NOTE TO READERS: I am starting to think that some of my comments and analysis are actually not that bad.  Thus I am probably going to start being more selective (not today but soon!) in terms of what I write on this blog.  It’s one thing to share things with the community but another to give away potential pearls of wisdom!

 

Chart Analysis (and executed trades) from the past two sessions

The last two sessions saw me take another 17 trades, with a net gain of 2.01R.  7 winners averaging +1.00R and 8 losers averaging -0.63R as well as two scratch trades.  This gives a win rate (excl scratches) of 47% but a RR ratio of 1.59 – a good combination of statistics.

AUDUSD

Below is the 5M chart for AUDUSD on Wed.  The initial setup was ok technically.  However is it a case that AUD crosses do not follow through momentum at the start of, or during the London session?  Is it a case of AUD reversing/retracing/pulling back during the London session and then resuming its earlier sentiment at the start of the New York session, i.e. around midday London time?  I could figure this out with some data analysis using historical data, say 30M candles; and measuring correlations between Asia-Pac, London, and New York candles – particularly on days that follow volatility-triggering Aussie events (basically any Tier-1 AUD event) or even Chinese data – which often has a direct influence on AUD crosses because of the large amount of Australian exports destined for China.

398 audusd jun3

Looking at the chart now, I can also see a H&S pattern as well as a double top just above the 78 handle.  Trading these bearish patterns could ahve resulted in profitable trades with price returning to the low from the Asian session before resuming its earlier bullish sentiment and trading higher from the ECB Press conference onwards.

DAX

There were several setups that i missed.  However the main point was that two of the trades I did take eventually turned out to be beautiful winners within minimal exposure time (less than 20-25 minutes) however I had exited prematurely because I couldn’t stomach the up and down swings in my open position.  I have noticed that my stop sizes in the DAX have been grinding up a little.  They used to be 20-30 points, now they are 40-50 points.  It seems critical that I enter at or close to the EMA levels – because the instrument is so volatile I cannot afford to enter on the wrong extreme end of the price move.  Thus if I am looking to go short and price has pushed 30 points away from the EMA then I need to wait for retracement.  An exception seems to be where there is rectangle (not overly big) and price pushes out – in that case it would be acceptable to short on the close of the candle or on the break of the rectangle.

 

dax jun4 403 406 412


dax jun3 399

So technically speaking there were no real DAX setups on Wed – the bullish ones didn’t really count plus one was too close to the ECB meet.  In terms of the DT technical patterns – when trading reversals, it should often be the case that one is trading into (rather than away from) the EMA’s.  In the case here it would be silly to short into the EMA’s – should i really want for a XO on the 5M?  If I did, it would mean that i would trade reversal patterns less often – and thus a higher proportion of my trades would be continuation/”trend”-following.

EURJPY

eurjpy jun3 401 

eurjpy jun5 (pre NFP)

eurjpy jun4 405 407

I just wrote another blog post about position management on my recent long EURJPY position – click here for it.

In a nutshell EURJPY provided some really good opportunities in the last two days, and over the last two weeks.  Not surprisingly given that it rallied 700 pips in two weeks.  I counted 13 valid long setups just for this week alone (from Monday morning to Friday lunchtime).  So I couldashouldawoulda taken a lot more trades and made a lot more money.  So: (1) The key here is to enter as close as possible to the EMA levels (and I need medium-size balls for that!), (2) to not be overaggressive with the stop management and (3) to leverage on short-term fundamentals (source comments from ECB/IMF, Tier-1, Tier-2 news etc) if there are any.  (4) The other key thing here is that this fx pair gave rise to a lot of setups, most likely because it has a lot of momentum on the 1H and 4H timeframe at present.  So the K7 strategy will likely be more profitable if I find strongly-trending instruments with low transaction costs that trade most actively during the London and New York session – or the Asia-Pac session (if I was living in Thailand), or the New York session (if I was living on east coast of the United States).

So just from a bit of reflection I seem to have obtained some valuable insights.

 

USDJPY

Took three trades here in the last two days.  All of them were yesterday – all of them were pretty ok actually.  I missed out on a great one on Wednesday – which really buggered me!!

usdjpy jun4 409 410 414 

usdjpy jun3 (no trade)

CABLE (GBPUSD)

to be completed

EURUSD

to be completed

 

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