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(Trying To) Keep Things Simple - TradeLog

Discussion in 'Commercial Trade Journals' started by tradeprofits, Jan 21, 2011.

  1. tradeprofits

    tradeprofits Private, 1st Class

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    In the upcoming months, I will do my very best to post my thoughts on (what I find to be) possible good trade setups along with more specific details about the way I intend to trade them. I will be doing this both through videos and text, all depending on what seems most appropriate. I will do my best to have the posts out in a timely manner.

    I will mainly focus on 1- and 4-hour timeframe setups. The main basis for the trades will be trend line breaks, hence not a lot of focus on fundamentals. Keep in mind that many of the setups will be based on the 4-hour timeframe and because of this I am likely to keep trades open overnight (which would be the Asian session for me, as I run on GMT+1). I will however, do my best to be square when going into the weekend.

    When I look for a setup, it will, as mentioned above, mostly be based on the break of a trend line. Now not only will I wait for the break, but also for the close of the candle in question; this is, in my opinion a key aspect, as this will minimize the amount of fake outs, which we will be caught in every now and then. With that being said, obviously we don’t want to enter a trade where we patiently have been waiting for the close of a candle, and in the meantime it´s be running too many pips in one direction or the other, as that possibly minimizes the risk:reward of the trade to a less than favorable level. How many pips is too much is impossible to state here, as that obviously is very trade specific, but I will do my best to elaborate on this for every single setup.

    For every single trade I will specify a specific stop loss level (no mental stops here guys; all stops are hard stops). Once again this is very trade specific, hence this is not based on a fixed pip count but more on recent levels of significance as support or resistance.

    I will do have my best to have a profit target for each trade as well, but I might not be up to date on this at all times, and because of this you should check back in this thread from time to time to look for further updates on this. I will often look to take our partial profits if possible and let the final half run for further profits.

    IMPORTANT:
    Things can go bad and there are never any guarantees. Because of this, you need to have a very strong focus on money management! If you do follow along with the ideas posted in here, that will be your responsibility, and I highly recommend that you apply a solid money management approach. Risk no more than 1% (at a max) on any given trade. That will be the same if we have a trade with a 300 pip stop or a 50 pip stop! Never put too much of your account balance at risk on any given trade. Make sure to adjust your position size, all depending on the stop loss. The risk exposure for a trade with a 300 pip stop should be the same as for a trade with 80 pip stop!

    That will be it for now guys. Next time we will look at the first possible setup.
     
  2. tradeprofits

    tradeprofits Private, 1st Class

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    Alright guys. Let´s take a look at some possible trade setups for the week ahead. I will look to add more specific instructions on how to trade some of this, either tomorrow or Monday morning. The ideas posted below are more to give you an idea of what I will be looking at, for now. I will be updating this with practical details.

    We did end the week with the final push on EUR/USD closer towards the 1.37 level which will be a key area for a lot of traders. Now, with the break of recent highs, I assume we are looking at possible further upside on EUR/USD, and in general, probably a bit more downside to the dollar. Fundamentally speaking, I am a bit more indecisive at the moment. Sure the successful bond auctions is EUR strengthening, but besides from the recent disappointing retails sales I still think that dollar strength will be back in the picture within a fairly short period of time, all depending on future news releases obviously. With that being said, let´s take a look at some possible scenarios for the week ahead.

    EUR/USD ended the week at 1.3612, which is somewhat in the middle of no-man’s-land, at least from a technical perspective. Now obviously I am going to wait for the market to open up and see if we might have a gap to one side of the other, but I am definitely seeing the 1.3740 level as a likely level to be hit, before we see any kind of significant bounce. With the direction set for now, we need some kind of fundamental catalyst in order to look for a reversal, but this is not necessarily a scheduled event, but maybe more of a change in sentiment as we, throughout the week, have seen a lot of indecision on this pair. So basically I am looking to buy in on dips and clearly a drop back down to the 1.3380 level should hold fairly well as support so keep a close eye on this area. As always don’t jump in immediately but wait for momentum to fade, and some kind of reaction to the level in question before jumping in.

    [​IMG]

    USD/CHF did give us a bit of downside throughout Friday and the 0.9450 level is where I will pay attention for a possible bounce (which would just around that tiny bit of trend line we got for now, if we continue straight down from here). I would not be surprise if we hit this level just around the same time where EUR/USD might line up just around the 1.3740 level. At a breach of the upper trend line, my bias would be changed for the time being, and I will change my focus to look for a possible long, and reaccess EUR/USD from a bullish to possible bearish setup.

    [​IMG]

    On USD/JPY we still have somewhat of a flag formation although we are coming a bit too close to recent lows; anyhow, it´s still trading very nicely in a typical channel formation and at a break of the upper part of the channel I am looking for a possible long trade which potentially could set us up for a really favorable risk:reward trade.

    [​IMG]

    Finally we have AUD/USD and this pair sure seems to be struggling more with the upside compare to EUR/USD, which is probably due to the recent RRR hike from China´s central bank along with the flood in Australia. Now again, we do have a bit of a technical setup here with lower highs and higher lows, and although it´s nothing close to perfect, I am still looking for a possible short at a breach of the lower trend line, which once again could set us up for a really favorable risk:reward trade.

    [​IMG]

    Keep in mind guys, that the charts presented here are daily time frames so you want to make sure that you apply the risk stop strategy. Don’t enter a trade based on the daily time frame with a 20 pip stop; that will be a suicide mission. And as always, adjust your position size and play as safe as possible. I will do my best to keep you guys updated on how I plan to trade this in practical terms.
     
  3. tradeprofits

    tradeprofits Private, 1st Class

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    Okay guys it looks like we might get our first trade today, on USD/JPY. I am waiting for the next 4-hour close to see if we can get it above our trendline. If we get the close above the 82.90 level and no more than 50 pips higher, I am looking to get in on a long trade with a stop at 81.81. Lets be patient and see where we get the close.
     
  4. tradeprofits

    tradeprofits Private, 1st Class

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    Hi traders,
    So we didn’t get triggered yesterday on USD/JPY as we did see a quick pullback.

    New Trade:
    However, we have a sell trade on EUR/USD based on a 4-hour break out to the downside. I will have the pictures up asap. So I will go in here at 1.3610 on a short on EUR/USD and place a stop loss at 1.3780. So all depending on spread and entry, that should be just around 170 pips in stop, which seems fair considering the downside potential. Keep in mind that you should adjust your position size and risk no more than 1% on any given trade. I will keep you all in the loop about profit target, and get the picture up asap.
     
  5. tradeprofits

    tradeprofits Private, 1st Class

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    Okay guys we have a 4 hour close above the level we were watching on USD/JPY so I will enter on a long trade here just around 83.05 with a stop loss at 81.81. More updates coming shortly.
     
  6. tradeprofits

    tradeprofits Private, 1st Class

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    we have a possible setup on EUR/USD if we get a pullback to the 1.48 level, where we could be looking for a possible long trade with a stop loss of just around 30 – 35 pips and an initial profit target around the 1.4880 level. In addition to this, I am in on a long trade on USD/CAD with a stop loss of 40 pips and I am looking to close this out before GDP or at least move my SL to BE if the trade allows for it. Finally we a beautiful picture on GBP/JPY which is looking perfect for a long trade from a technical perspective; however I will re-access a possible entry on this pair on Monday as I would prefer not to have any open positions during this weekend. See the video below for a detailed explanation.

    <iframe width="560" height="349" src="http://www.youtube.com/embed/0-jBocGx5UY" frameborder="0" allowfullscreen></iframe>
     
  7. tradeprofits

    tradeprofits Private, 1st Class

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    EUR/USD has depreciated strongly over the previous five days. With a drop of just around 600 pips since the recent swing high to the currently traded level at 1.4325 over such a short period of time, a pullback is definitely a possibility. However, trading the pair after such a thrust to the downside, any trade, long or short does seem to carry a different level of risk; We don’t really want to take a short because of the recent thrust down with more than 600 pips a pullback seems likely. However, we don’t want to enter long, because that is clearly going short-term counter trend.

    It could be argued that this is nothing more than a pullback, before we see continuation to the upside, but the probable reason why traders look at this as a possible trend change is obviously fundamentals, specially due to the latest ECB press conference where Trichet gave us an indication that there is no rate-hike coming up just around the corner – This is obviously a very bearish element for the EUR, as the reason for the recent rally has been because of his statement on the latest press conference where he pretty much promised further rate-hikes in upcoming months. With this is mind, focus is going back to sovereign debt crisis and the bailouts for southern European countries. In addition to this, we had NFP which came out as a strong number for the third month in a row, which obviously also supports further dollar strength.

    It seems likely that retail traders have been looking at EUR/USD with further downside in mind as well; first and foremost, simply by looking at price action, the speed of which such a move have taken place, pretty much without any kind of pullback does clearly give us a clue that might be more than just a pullback.

    From a technical standpoint, the trend line on the daily timeframe has been broken to the downside, which just adds to the confirmation for possible further downside.

    As you can tell, I am currently favoring further downside on the pair, but the aforementioned issue remains; after a 600 pip move down, I would prefer to wait for some kind of pullback before taking a short – at least from a swing trading approach. On an intraday basis I wouldn’t mind taking a long if the right setup confirms it, but long trades are clearly ones which should have a fairly tight stop loss and take profit levels.

    Ideas
    With the above mentioned elements in mind, I am mainly looking for a short trade.

    Any kind of pullback and indications of a short term reversal would be enough for me to look for a short trade with a target around the 1.4020 level. Due to the above mentioned levels, I will not be posting any specific levels.
     
  8. tradeprofits

    tradeprofits Private, 1st Class

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    EUR/USD is currently trading at the 1.4430 level. From a technical standpoint it does look biased for further upside. We currently have a strong key level of resistance at the 1.4440 level. If the pair does break this level, the next apparent level of resistance will be around the 1.4540 level.

    Not only is the pair clearly making higher highs and higher lows but we also broke the 1.4400 level which clearly caused some resistance. Correlation wise, USD/CHF has been making new lows which is indicative of further EUR/USD upside. However, from a vague fundamental perspective, I still look at this as a correction from the thrust down after Tricet´s latest announcement about future rate hike´s from ECB. Obviously the recent rally on EUR/USD is also supported by the disappointing GDP figure from US.

    With that being said, my overall bias is still to the downside from a longer term perspective. This is both supported by the above mentioned fundamental though, along with some possible pre-sentiment buying into dollar based on upcoming NFP numbers – Expectations are for a lower number than previous release but still a good number nonetheless. Today we will get the ADP Non-Farm Employment Change which will give us an indication of the upcoming NFP numbers; hence I will clearly be paying close attention to this release.

    [​IMG]

    Basically I still prefer a short, but with the current trend, this has to be timely executed. From a technical standpoint, the current level is clearly a key level, where we could see a possible reversal. If we get a break and close on the 1-hour timeframe above the 1.4450 I would definitely wait for another rally, before considering a possible short. I might be looking for a possible short here around London open, if things line up, but otherwise wait for better times to look for a possible short. A break and close above the 1.4450 level could give us a possibility to take a long trade with a profit target of just around 100 pips.

    As always, play it safe and pay attention to the news coming out today.

    Trading Ideas
    With the above mentioned aspects in mind, I am mainly looking for a short trade.

    Keep an eye on price action around London open for a possible short. We do have a tiny bit of trendline on the shorter timeframe (see the picture above). If you don’t see a possible entry based on price action, you could pay attention to a possible break of this trendline for a short. A stop above 1.4450 seems like a good choice as a break of that level would clearly indicate another possible run up. If you get in on a short trade I would let it run, and not set a specific target on the trade for now as there should be plenty of potential downside.

    With a break and close above the 1.4450 level on the 1-hour timeframe, a possible long trade seems possible. I would look for a stop of just around the 1.4400 to 1.4420 level and a profit target around 1.4550. Hence if the 1-hour close is too close to 1.4550 it will be a no trade as this would give us a less than favorable risk:reward ratio.
     
  9. tradeprofits

    tradeprofits Private, 1st Class

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    Taking a closer look at the latest price action on EUR/USD, further downside seems like a good possibility. From the 1-hour chat EUR/USD just made a new and fairly significant new lower low. Obviously the right thing to do, would be to stay on the sideline until we get confirmation of a lower high, and then trade the break of the recent low. However, with the new lower low, the break of the 1-hour bullish trendline along with a vague fundamental idea which is primarily based on yesterday FOMC statement where the chances of QE3 was downplayed.

    Bias

    Click on the picture below to see a picture of the 1-Hour chart of EUR/USD. With a drop of just around 150 pips since recent swing high, a pullback is possible, but my main bias for now is further downside. However, it also seems very possible that we might just see immediate continuation further down. Keep an eye on price action in order to get a good entry point.

    [​IMG]

    In addition to a possible short on EUR/USD, a long on USD/CHF and USD/JPY seems to be good possible options as well. With USD/JPY being fairly close to the 80 figure I think this pair sets up very well for a possible long with a fairly tight stop. On USD/CHF, I will pay attention to price action and correlation with EUR/USD in order to catch a possible long.

    Ideas
    With the above mentioned aspects in mind, I am mainly looking for a short trade.

    Keep an eye on price action around London open and look for correlation and significant closing prices above or below key levels. I would prefer to get in short which would be around the lower part of the Asian session range. A stop above the upper part of the range should do fine for a short term short trade. I would not be too greedy with the profit target, but look for somewhere in the range of 50 – 100 pips. If you get in at the lower part of the range, keep an eye on risk:reward. A key level for now is 1.4290 before possible continuation to the downside.

    As my bias is to the downside, I would prefer to not take any long trades as of now, but if we start to see a pullback, keep an eye on the 1.4340 level. I would not trade a long trade, but I would pay attention to this level for a possible chance to take a short trade.
     
  10. tradeprofits

    tradeprofits Private, 1st Class

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    EUR/USD is currently trading around the 1.4300 level. We did have a short trade last week which played out very well, with a 30 pip stop and over 100 pips in profit, due to a really good risk:reward setup (Trading Forex – EUR/USD Up or Down). As mentioned in the last post, I think further downside is supported specially due to the recent FOMC statement, and this still holds true. Even though the upcoming Friday is the first Friday of July, NFP will not be released before the following week, which is normal when the first actually falls on a Friday. However, we do have a couple of high impact releases out of US this week and the expectations are in favor of a stronger USD, all except ISM Manufacturing PMI.

    Based on a pre-news sentiment for the week, further USD strength is supported. However, there is a lot of fundamental coming out every single minute, constantly changing the direction of EUR/USD, at least this is what took place during last week. We also want to be very careful when Trichet will be speaking on Tuesday, as this could give us a volatile market.

    From a technical standpoint, on a daily chart the pair is making lower highs and higher lows, creating a symmetric triangle which eventually will make the pair break out, either to the up- or downside. The narrower the pair starts to trade, the more of a powerful breakout is to be expected. From a vague fundamental perspective, I have the same bias as I did last week; further downside. Things look fairly bad for both parts, but due to recent comment on QE3, I think downside should be favored for now. Trading forex is a risky game, and things can change quickly so you want to pay close attention to the constant news flow as the pair seems to react strongly to even small announcements these days.

    [​IMG]

    From the 4-hour chart, things looks a bit better for a short term position, specially in terms of price action, where the pair has been making lower lows and lower highs. Right now the pair is trading around the lower part of the range so a pullback would be the ideal scenario for a possible short trade.

    [​IMG]

    If we can get a pullback to the 1.4400 level, a short trade should be in the cards, and from a swing trade perspective, a 200 pip stop would place us above the upper trendline. A profit target around the 1.4000 level seems to be a reasonable target, and this would give us a risk:reward ratio of 1:2. I would prefer to get in with a lower stop loss but obviously this requires a bit more of exact entry point, than simply jumping in at a round number. 1.4400 has proven to work well as previous support and resistance, and it seems to be a perfect level to look for a possible short trade in my opinion.

    Due to the aforementioned aspects, I am mainly looking to short this pair, and would prefer to do this on a pullback.

    I will be looking closely at price action in the morning around London open, and the hours before to get an idea. I would prefer to wait for a pullback to the 1.4400 and take a short from there. A fairly safe bet would be to take a short around the 1.4400 level with a 200 pip stop and 400 pip profit target. I will pay close attention to the moves on shorter time frames, to see if will be possible to get in with a smaller stop loss, which, is possible could set us up for a phenomenal risk:reward trade.
     

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