OK, my statements are less statements and more questions. I digested a lot of info in the last few days and I am sure I missed stuff. This post is an exercise to help me try and sort through all the stuff swimming in my head right now.
I searched and searched for a decent pattern tonight. I finally found one on the NZD/USD 40m chart. It looked like a pretty decent abandoned baby pattern, which according the the candle reference link Tymen posted, is a good sign of a trend change.
Now, I knew right away this would be a high risk trade because of the direction the upper BB band was traveling. This pattern would probably just send the action sideways for a bit, and if no other trend reversing pattern occurred than the price would continue rising. So I went into this trade knowing a small profit was all it would give me.
A: I entered on the candle after the pattern was completed. My 5m chart with BB and keltner bands indicated a entry on the lower k band would be the best I could get. The price was sitting above the lower k band at that moment so I entered immediately at 0.7575. I set a stop loss 10 pips above at 0.7585.
On to the 5m chart with BB and starc.
B. My 1st amount: 0.7575
C. Stop Loss: 0.7585
I knew almost immediately after entering the trade it would be a 'retrace' trade (correct term?). The first 3 candles of the price rise did not pierce the upper band of the starc, so I waited.
D. Sure enough, the candle rose and pierced the top starc band. To be honest, I was staring in disbelief that it had actually happened like Tymen said, so I did not get the best entry. When I finally snapped out of my stuper I put in a second amount at 0.7580, which averaged out my total amount to 0.7577.
At this point I sat and watched both the 40m and 5m charts. I wanted to make sure on the 40m chart that I did not get to far away from the trend changing pattern. A few times on the 5m chart the price action came close to piercing the bottom starc band but did not so I waited.
E. Price action drops far, putting me ahead 6 pips at that point. So I move my stop loss down to 0.7576.
F. Finally the price action pierces the bottom starc band. I start looking around for the way to close the trade (I switched to the GFT platform yesterday so I'm not sure where everything is at). While I was trying to figure out how to close the trade the price action came back above the lower starc band. I finally figured out where I could close the trade and wanted to exit out of one amount to lock in some profit and than watch the second and final amount to see if it would go down. Unfortunately I could not figure out how to only close part of the trade and the time frame moved to the next frame!
G. So the next candle opens below the bottom starc band. I think to myself I should move the stop loss down again, so I move it to 0.7574. Price action continues moving up and down, at this point I get the feeling I should exit but I think to myself "hey, I got a stop loss, let's see what happens".
H. The price shoots up, and I think "oh well, at least I didn't loose a bunch of pips on the first trade". But the price action shoots up past my stop loss and nothing happens! So I scramble around again to find the open orders window so I can close the trade, and in the process lose 4 pips. Doh!
In hindsight I should have closed the whole position at F, since this was a high risk trade on a candle pattern that was probably only going to interrupt the upward movement for a bit. IF I had done that I would have made a nice 6 pip profit (not sure if that is before or after the spread).
Also, that 40m pattern was maybe not that strong, but really, I searched for hours tonight through 18 pairs and several different time frames before I found a pattern I was somewhat familiar with. I just wanted to give the system a go and see how she drove!
I have to say I am happy. A 4 pip loss is not that bad for the first trade trying to sort out all the information I have digested the last few days.
Please feel free to comment and correct me where I made mistakes. I plan on reading through the last 30 pages or so again but I wouldn't mind some feedback from some of you that have been on here awhile.
JJ