I wish I had my computer when the bad news came out of US. Definitely, the EUR was the stronger economy vs US, making it a high probability trade which would result in the higher volatility currency.
My trade plan for today will be, consider economic events, think about the overall trend and decide based on technical analysis.
I am excited to keep improving and learning, so let’s do it!
Since, I got home, Very favourable economic data from EUR vs US tempted me to trade the trend. Even though I got in late, I want to practice trading after the news.
Virtually all profitable retail traders say ‘retail traders should not try to trade the news’. And yet, like a moth to a flame, a constant stream of new traders want to trade the news.
From Dr Elder’s The New Trading for a Living (emphasis mine):
Chaos Theory has achieved prominence in the recent decades. Markets are largely chaotic, and the only time you can have an edge is during orderly periods. In my view, markets are chaotic much of the time, but out of that chaos, islands of order and structure keep emerging and disappearing. The essence of market analysis is recognizing the emergence of orderly patterns and having enough courage and conviction to trade them. If you trade during chaotic periods, the only ones to benefit will be your broker, who’ll collect his commission, and a professional day-trader, who’ll scalp you.
The key point to keep in mind is that once in a while a pattern emerges from chaos. Your system should recognize this transition, and that’s when you should put on a trade! Earlier we spoke about the one great advantage of a private trader over professionals—he may wait for a good trade instead of having to be active each day. The chaos theory confirms that message.
If you don’t believe him, consider Anton Kriel, who makes it clear that retail traders trying to trade around news events are the liquidity that the institutional traders use to exit the positions they set up in anticipation of the news. They are, by design, the people left holding the bag.
I’m not trying to be mean. You clearly have a passion and an interest for this. But I really don’t see this approach working out for a retail trader in the long run.
You may see follow-through, but, with only an 11-pip stop, after a strong move up like that, I suspect you might get caught in a pull-back and stopped out and still be right in your view! Classic! But I hope you don’t of course!
Very often with such reactive strong, big candles, people wait for around a 50% pullback before entering. Lets see what happens here…
we’ll see
Thank you for your recommendation tho, I’ll learn through experience and trying haha.
With my news trading, I should hold it no longer than 1 hour, is the aim.
Anyways, with the USD/JPY, the 1-day chart shows that it’s on an overall downtrend. Economic news from the US was less than expected. I shorted my position.
I am not done with this EURUSD trade just YET,
I am shorting this trade because I believe trader’s hit a peak before the 1.20600 and profit taking is going to take place. Let’s see how it goes this time.
To be honest Ben I think this is (was) more of a revenge trade than a fundamentals-based view - and with only 8 pips stop???
It seems to me in my näive thinking that you are a) planning your trades on a swing trader style longer term analysis, but b) monitoring a 1 hour chart and then c) placing trades more suited to a 15-5min timeframe in terms of TP and SL?
I don’t meant to be critical, but the pieces here all seem to be from different jigsaw puzzles?
You are right, need to fix my trading plan. I should consider my stop loss and take profit scenario more serious, rather than entering th market quickly.
I am still learning my trading personality and I think I am more comfortable being a day trader. Experience will tell how I develop myself.
As long as I keep my capital intact and keep my risk management in-line, I will keep learning and getting better.
I think it would also be very useful for you to have an actual, written, trading plan. Everything you seem to be doing now is completely discretionary. This means that you can’t meaningfully compare different trades, or aggregate statistics.
When you have a trading plan, you are (in many ways) making the same trade over and over again. So you can get really good at that trade. You can calculate your edge and evaluate your hit rate and your profitability. Then you can tweak and fine tune your plan, and compare your current performance to your historical performance to see if your changes have been an improvement or not. And then you can start the cycle all over again.
Put another way, when you close out a position, all you have is a profit or loss. When somebody on a trading plan closes a position, they also have data that makes it more likely that their future trades will be winners.
if i can interject
i think he’ll hit the Take profit,
but i also think 8 pips is not realistic, this is EUR USD i was thinking more like 40 pips Stop Loss
One other small point. You placed your TP at 1.2060. This is a “whole number” type psychological level and it is worth fine tuning your orders so that you are just in front of it with a TP and just behind it with a SL.
If the market is already stretched a bit then it can easily fall short of these types of levels, as it did for you today, because of the orders sitting in front of them.
Naturally, if the market is still in strengh then it will sail through anyway but it worth sacrificing a pip or two to catch the level!
I suspect that if you had got your profit at 1.2059 then you probably wouldn’t have taken that short afterwards?
Manxx is so right on this position. I actually have two positions in the same trade but my stops are both at 1.2135 ! At teh very least, your stop should be well outside that pin on the end of the spike.
You can’t use fixed rules on a discretionary trade like that. - I don’t think this is a single-day trade either.
On the plus side - IF your stop holds it will be a great profit - but your TP will be too close
[Edit - Ben look at that similar spike to the left hand side of your trade on your chart - see how the top makes a long wick, then the very next bar sends up a “probe” ro stop out any Shorts with too tight stops ? - “they” can do that at any time. ]
i probably also would have put the Take profit at around 1.2000
and the stop loss at around 1.3000
but… that’s mean
i think there is even potential for it to drop to 1.1800 but i personally wouldn’t risk it
but i think 1.2000 is pretty much a given
Assuming one manages their risk
I am personally a little bit cautious about a long term negative view on EU right now. My bones say we should still see dollar strength for several reasons, but the daily chart is not giving a very negative view just yet…but it doesn’t actually give much more than a rather consolidationary view for either direction right now! So I am neutral on long term positions, only day trades for now, as and when they come,
Those red circles beloware showing a revisit to the highs from November, with today’s strong upmove suggesting possibly even more to the upside (first?). But in overall terms the price action within that big blue circle is typical of a longer trend fading out and price spending time meandering around going nowhere…and causing a lot of stops to get hit!
Current (stripped down) daily chart (I like pretty charts! )
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