From Preparation to Execution: My Journey in Forex Trading

[Jag757]

Caught a Breakout, but Missed the Full Ride: Reflections from a 20-Year Trader

Hey everyone,

I wanted to share a recent trade experience on GBP/USD that was both a success and a learning moment for me. As many of you know, I’ve been trading for almost 20 years, but this trade reminded me that we all face challenges, no matter how experienced we are.

The Setup and Execution

I spotted a potential breakout on GBP/USD, which I acted on by shorting as the price bounced off a resistance level. I set my targets based on key support levels and used the 4-hour chart for a broader perspective—a crucial step that I almost overlooked. I managed the trade well, taking partial profits and moving my stop loss to break even to secure gains.

Reflecting on the Missed Opportunity

However, the price continued to plummet, eventually moving down around 100 pips, while I captured only about half. Why didn’t I ride it all the way down? Despite my experience, I found myself facing the same fears and nerves that many new traders experience. The fear of losing profits led me to exit earlier than necessary, missing out on a larger portion of the move.

What I Should Have Done Differently

In hindsight, implementing a trailing stop would have been the ideal strategy. It would have allowed me to lock in profits while giving the trade room to breathe. This is a classic example of how even seasoned traders can benefit from the basics—like using trailing stops—to manage trades more effectively.

Key Takeaways

1. Trust the Process: Stick to the plan and use tools like trailing stops to protect profits and capture more of the move.

2. Manage Emotions: Acknowledge the fear and nerves, but don’t let them dictate your trading decisions.

3. Continuous Learning: No matter how long you’ve been trading, there’s always room for growth and improvement.

This experience reinforced the importance of discipline and sticking to proven strategies. I hope sharing this helps others see that even with years of experience, we all face similar challenges and have opportunities to learn and grow.

Happy trading, and stay disciplined!

[ayodimej1]

I do miss lots of setup i would have take, i have learnt to let it slide and wait for another one. No island of setup, you miss this one, there are tons of it on their way.

Astonishing you’ve being trading since 2014, what have you found different in all these years of experience if you dont mind sharing?

[Torchwave]

Your experience nicely sums up the fact that traders can never do away with the basic trading principles, and your conclusion mirrors my trading convictions developed from my experiences in the markets which includes similar one you just experienced. In my case, I have had to learn more than twice. Lol.

[Jag757]

I have actually been trading since 2005. Time flies! I don’t think much has changed really. I’m still using MT4 although I have used other charts as well. The GBP/USD used to have a bigger daily range. You could count on it moving from 100 to 180 pips per day. It was a little easier in my opinion.

Thanks for the question and I look forward to talking with you again.
J

[Jag757]

I think trading brings out your personality and I have always liked to lock profit in. I had a bigger stake last night and simply did not want to give back the gains. It made me a little jumpy and way too cautious. That has always been my weakness when it occurs. But, I had no way of knowing I was in such a large move and my targets were set and I stuck with the plan. So there is some good and bad.

J

[Torchwave]

Obviously, your bigger trade size cranked up your emotion. Perfectly normal. You acted in the best interest of your capital preservation. Who wouldn’t? The sobering truth from this experience of yours is that we can never be rid of emotion try as much as we can because we are humans. We all share the same weakness, but the most important thing is you won.

[Jag757]

Thanks, I appreciate that as a fellow trader. I do think it’s important to review what you do right and wrong after a trade. Also, I think when you are sharing on a forum, it’s important to be honest with the people reading your posts. Trading is not easy and I hear that from people who are much more successful than me. But, as you said, we all share some of the same weakness and fear. Just recognize it and move on.

J

[Jag757]

This is what I am looking at the moment. We are breaking out of consolidation now.

Comprehensive Analysis for GBP/USD with Upcoming NFP News

Current Market Conditions

1. Overall Trend:

• Bearish across multiple time frames (15-minute, 4-hour, daily).

• Trading below 21, 50, and 200-period moving averages, indicating a strong downtrend.

2. Indicators:

• ATR: Stable to increasing volatility.

• RSI: Near oversold levels on shorter time frames, indicating potential for short-term bounce.

• MACD: Bearish momentum across multiple time frames.

3. Price Levels:

• Support: 1.2715, 1.2685

• Resistance: 1.2905

Upcoming NFP News

• Event: Non-Farm Payrolls (NFP) Report

• Date and Time: Tomorrow, typically released at 8:30 AM ET.

• Expected Impact: High volatility across USD pairs, including GBP/USD.

Strategy Considerations

1. Pre-NFP Trading:

• Expect reduced volatility and choppy market conditions leading up to the NFP release.

• Avoid taking significant positions immediately before the NFP release to minimize risk from unpredictable price swings.

2. Post-NFP Reaction:

• Monitor the initial reaction to the NFP release. There may be sharp movements and increased volatility.

• Allow the market to settle and confirm the direction before entering new trades.

Potential Scenarios

1. Bearish Scenario (NFP Beats Expectations):

• Strong NFP data typically strengthens the USD, potentially pushing GBP/USD lower.

• Confirm a bearish breakout below 1.2715 with increased volume and bearish candlestick patterns.

• Entry: Short position on a pullback to the breakout level (around 1.2715 or higher if there’s a retest).

• Stop Loss: Above recent highs or the breakout high.

• Take Profit: Target next support levels (e.g., 1.2685 or lower).

2. Bullish Reversal Scenario (NFP Misses Expectations):

• Weak NFP data may weaken the USD, potentially causing a reversal in GBP/USD.

• Confirm a bullish reversal above 1.2715 with strong bullish candles and increased volume.

• Entry: Long position if price moves back above 1.2715 with confirmation.

• Stop Loss: Below recent lows or the breakout low.

• Take Profit: Target next resistance levels (e.g., 1.2905).

Key Points to Monitor

1. Volume and Volatility:

• Increased volume and volatility post-NFP can confirm the breakout direction.

• Use volume as a proxy for market strength and commitment to the move.

2. Candle Patterns:

• Look for strong candlestick patterns (e.g., engulfing candles, pin bars) to confirm entries.

• Avoid trades based on weak or ambiguous candles.

3. Major Market Sessions:

• Major market sessions (London, New York) provide more reliable moves.

• Plan to take positions when these sessions are active for better confirmation and follow-through.

Example Trading Plan

1. Pre-NFP:

• Avoid major positions and watch for price action near key levels (1.2715, 1.2685, 1.2905).

2. Post-NFP (Bearish Scenario):

• Wait for the initial reaction to stabilize.

• Enter short on confirmed bearish breakout with volume.

• Entry: Around 1.2715

• Stop Loss: Above 1.2750 (recent highs)

• Take Profit: 1.2685 or lower

3. Post-NFP (Bullish Reversal Scenario):

• Wait for confirmation of a reversal above 1.2715.

• Enter long on confirmed bullish move with volume.

• Entry: Above 1.2715

• Stop Loss: Below 1.2680 (recent lows)

• Take Profit: 1.2905

Final Notes

• Risk Management: Ensure each trade has a favorable risk-reward ratio (e.g., 2:1 or 3:1).

• Patience: Wait for confirmed signals and avoid impulsive trades, especially around major news events like NFP.

• Review: Post-trade analysis to understand the impact of NFP on your trades and refine strategies for future events.

[Jag757]

How about a little bonus analysis tonight. I have been trading this pair some during the summer range and find it follows the same patterns as the Eur/Usd and the Gbp/Usd

Let’s analyze the NZD/USD charts provided and incorporate the upcoming NFP news release into our strategy.

Chart Analysis for NZD/USD

Chart 1: NZD/USD 15-Minute Chart

1. Trend Analysis:

• The price has broken below the 200-period moving average, indicating a potential shift towards a bearish trend.

• The 21 and 50-period moving averages are also trending downward, confirming the bearish sentiment.

2. Indicators:

• ATR: Indicates moderate volatility.

• RSI: Near the oversold region, suggesting a potential for a short-term bounce.

• MACD: The MACD line is below the signal line, indicating bearish momentum.

Chart 2: NZD/USD 4-Hour Chart

1. Trend Analysis:

• The price has recently crossed below the 21, 50, and 200-period moving averages, indicating a bearish trend.

• The overall trend is bearish with lower highs and lower lows.

2. Indicators:

• ATR: Moderate volatility.

• RSI: Close to the oversold territory, suggesting potential for a short-term reversal or consolidation.

• MACD: Bearish momentum with the MACD line below the signal line.

Strategy Considerations with NFP News

1. Pre-NFP Trading:

• Similar to GBP/USD, expect reduced volatility and potential choppiness leading up to the NFP release.

• Avoid taking significant positions immediately before the NFP release to minimize risk from unpredictable price swings.

2. Post-NFP Reaction:

• The initial reaction to the NFP release will likely cause sharp movements and increased volatility in the market.

• Allow the market to settle and confirm the direction before entering new trades.

Potential Scenarios

1. Bearish Scenario (NFP Beats Expectations):

• Strong NFP data typically strengthens the USD, potentially pushing NZD/USD lower.

• Confirm a bearish breakout below recent support levels with increased volume and bearish candlestick patterns.

• Entry: Short position on a pullback to the breakout level (around 0.5935 or higher if there’s a retest).

• Stop Loss: Above recent highs or the breakout high.

• Take Profit: Target next support levels (e.g., 0.5900 or lower).

2. Bullish Reversal Scenario (NFP Misses Expectations):

• Weak NFP data may weaken the USD, potentially causing a reversal in NZD/USD.

• Confirm a bullish reversal above key levels with strong bullish candles and increased volume.

• Entry: Long position if price moves back above 0.5950 with confirmation.

• Stop Loss: Below recent lows or the breakout low.

• Take Profit: Target next resistance levels (e.g., 0.6000).

Key Points to Monitor

1. Volume and Volatility:

• Increased volume and volatility post-NFP can confirm the breakout direction.

• Use volume as a proxy for market strength and commitment to the move.

2. Candle Patterns:

• Look for strong candlestick patterns (e.g., engulfing candles, pin bars) to confirm entries.

• Avoid trades based on weak or ambiguous candles.

3. Major Market Sessions:

• Major market sessions (London, New York) provide more reliable moves.

• Plan to take positions when these sessions are active for better confirmation and follow-through.

Example Trading Plan

1. Pre-NFP:

• Avoid major positions and watch for price action near key levels (0.5935, 0.5950, 0.6000).

2. Post-NFP (Bearish Scenario):

• Wait for the initial reaction to stabilize.

• Enter short on confirmed bearish breakout with volume.

• Entry: Around 0.5935

• Stop Loss: Above 0.5960 (recent highs)

• Take Profit: 0.5900 or lower

3. Post-NFP (Bullish Reversal Scenario):

• Wait for confirmation of a reversal above 0.5950.

• Enter long on confirmed bullish move with volume.

• Entry: Above 0.5950

• Stop Loss: Below 0.5920 (recent lows)

• Take Profit: 0.6000

Final Notes

• Risk Management: Ensure each trade has a favorable risk-reward ratio (e.g., 2:1 or 3:1).

• Patience: Wait for confirmed signals and avoid impulsive trades, especially around major news events like NFP.

• Review: Post-trade analysis to understand the impact of NFP on your trades and refine strategies for future events.

[Jag757]

I absolutely don’t trade right before or after Non-Farm Payroll. Even if I post an analysis, I don’t do it. There are too many other times to find a good trade. Trading will probably be okay during London but I would be careful of false signals even then.

Technical Analysis for EUR/USD (Without NFP Considerations)

Chart 1: EUR/USD 15-Minute Chart

1. Trend Analysis:

• The price is oscillating around the moving averages, indicating a potential range-bound market.

• The 21 and 50-period moving averages are close to the price, suggesting a lack of clear direction in the short term.

2. Indicators:

• ATR: Indicates low volatility, suggesting limited price movement.

• RSI: Around the midpoint, indicating no extreme conditions.

• MACD: The MACD line is close to the signal line, indicating a lack of momentum.

Chart 2: EUR/USD 4-Hour Chart

1. Trend Analysis:

• The price has recently crossed below the 200-period moving average, indicating a potential bearish trend.

• The 21 and 50-period moving averages are also sloping downward, supporting the bearish sentiment.

2. Indicators:

• ATR: Moderate volatility.

• RSI: Slightly below the midpoint, indicating a bearish bias but not in oversold territory.

• MACD: Bearish momentum with the MACD line below the signal line.

Chart 3: EUR/USD Daily Chart

1. Trend Analysis:

• The price is below the 21, 50, and 200-period moving averages, indicating a bearish trend.

• The overall trend is bearish with lower highs and lower lows.

2. Indicators:

• ATR: Indicates moderate volatility.

• RSI: Around the midpoint, not indicating extreme conditions.

• MACD: Bearish momentum as the MACD line is below the signal line.

Potential Trading Strategies

Scenario 1: Range-Bound Trading (15-Minute Chart)

1. Identification:

• The price is oscillating around moving averages, indicating a range-bound market.

2. Strategy:

• Trade within the range by buying at support and selling at resistance.

• Support: Around 1.0920

• Resistance: Around 1.0950

3. Entry:

• Long: Enter at or near support (1.0920) with confirmation (e.g., bullish candlestick pattern).

• Short: Enter at or near resistance (1.0950) with confirmation (e.g., bearish candlestick pattern).

4. Stop Loss:

• Place stop loss just below support for long positions and just above resistance for short positions.

5. Take Profit:

• Target the opposite end of the range (1.0950 for longs, 1.0920 for shorts).

Scenario 2: Bearish Continuation (4-Hour Chart)

1. Identification:

• The price has crossed below the 200-period moving average, indicating a potential bearish trend continuation.

2. Strategy:

• Look for opportunities to short on pullbacks to resistance levels.

• Resistance: Around 1.0950

3. Entry:

• Short: Enter on a pullback to the 1.0950 resistance level with confirmation (e.g., bearish candlestick pattern, MACD crossover).

4. Stop Loss:

• Place stop loss above the recent high or the 200-period moving average.

5. Take Profit:

• Target the next support level (e.g., 1.0880).

Scenario 3: Bearish Continuation (Daily Chart)

1. Identification:

• The price is below the 21, 50, and 200-period moving averages, indicating a bearish trend.

2. Strategy:

• Look for opportunities to short on pullbacks to resistance levels.

• Resistance: Around 1.1000

3. Entry:

• Short: Enter on a pullback to the 1.1000 resistance level with confirmation (e.g., bearish candlestick pattern, MACD crossover).

4. Stop Loss:

• Place stop loss above the recent high or the 50-period moving average.

5. Take Profit:

• Target the next support level (e.g., 1.0880 or lower).

Final Notes

• Risk Management: Ensure each trade has a favorable risk-reward ratio (e.g., 2:1 or 3:1).

• Patience: Wait for confirmed signals and avoid impulsive trades.

• Review: Post-trade analysis to refine strategies for future trades.

[Jag757]

It’s highly unlikely I will trade on Non Farm Payroll day. Unless things come out exactly as expected. You don’t have to trade every day.

[Jag757]

Never say never, I bought here and followed it up for about 30 pips. I will take that. It might retreat a bit and then head back up to the previous high. There is possibly more pips for the brave. I wanted to take a picture of the chart as I exited the trade but had to move fast. But you can clearly see the entry.

[Jag757]

I think we could be primed to make a move tonight but nobody ever knows. Below are the things I am reviewing and it would surely be worth a few minutes to have a better opportunity to catch the move.

GBP/USD Analysis and Economic Overview

Technical Analysis

Hourly Chart (H1) Analysis:

• Current Price Action: The GBP/USD pair is approaching the 61.8% Fibonacci retracement level around 1.2770. This level also aligns with a crucial trend line on the 4-hour chart.

• Support Levels:

• 1.2770: 61.8% Fibonacci retracement level and crucial trend line on the 4-hour chart.

• 1.2735: Recent intraday low.

• 1.2700: Low of Friday and significant psychological level.

• Resistance Levels:

• 1.2785: 50% Fibonacci retracement level on the hourly chart.

• 1.2830: Recent swing high.

• Indicators:

• RSI: Trending lower, reflecting increased bearish momentum.

• MACD: Potential bearish crossover, indicating bearish momentum.

• ATR: Increased values suggest higher volatility.

4-Hour Chart (H4) Analysis:

• Price Action: The price is moving towards the lower Fibonacci levels, breaking below recent support levels.

• Key Levels:

• Support: 1.2770 (61.8% Fibonacci retracement level and crucial trend line).

• Resistance: 1.2785 (50% Fibonacci retracement level) and 1.2830 (recent swing high).

• Indicators:

• RSI: Likely moving towards the 30 level, indicating oversold conditions.

• MACD: Showing bearish momentum with potential continuation.

• ATR: High values indicating higher volatility.

Economic Overview

US Economic Data:

• Recent Weakness: Weak US economic data, coupled with poor performance in the stock and bond markets, can lead to a mixed impact on the USD. While the USD might strengthen as a safe haven, systemic economic weakness could also weaken it.

• Stock and Bond Markets: The declines in these markets add to the complexity, with potential safe-haven flows supporting the USD, but also indicating economic instability.

UK Economic Data:

• Monitor key economic releases from the UK, such as GDP, inflation, and employment data. Worse-than-expected results could weaken the GBP and push the pair lower.

Trading Strategy

Pre-News Setup

Key Levels to Monitor:

• Support: 1.2770 (61.8% Fibonacci retracement level and crucial trend line on the 4-hour chart).

• Resistance: 1.2785 (50% Fibonacci retracement level), 1.2830 (recent swing high).

Risk Management:

• Tighten stop-loss levels and consider reducing position sizes if trading in the hours leading up to the news.

• Plan to close positions well before the news release to avoid high volatility.

Trading Scenarios:

• Bounce from 61.8% Fibonacci Level:

• Action: Consider entering long positions targeting 1.2785 and 1.2830. Place stop-loss orders below 1.2770.

• Break Below 61.8% Fibonacci Level:

• Action: Consider entering short positions targeting 1.2735 and then 1.2700. Place stop-loss orders above 1.2770.

• No Clear Direction:

• Action: Avoid entering trades until there is a clearer signal. Monitor the market closely for significant news or price action.

Late News Releases

• ISM Services PMI:

• Time: 10:00 AM EDT

• Significance: High impact on the USD. A strong reading indicates economic expansion, while a weak reading indicates contraction. However, since this release is late in the morning, it may not heavily influence immediate trading decisions but should be considered when holding trades around the release time.

• Final Services PMI:

• Time: 9:45 AM EDT

• Significance: Lower impact compared to ISM Services PMI but still important for market sentiment.

Conclusion

The GBP/USD pair is approaching critical levels, with the 1.2770 level being pivotal for potential bounce or breakdown scenarios. Given the timing of the significant news releases tomorrow, it’s prudent to manage trades carefully and avoid holding positions during the high-volatility periods around these releases. Monitor the market sentiment and technical indicators closely to adapt your strategy as needed.

[Jag757]

I took my own advice and am in a good one now. This was text book if you had read my analysis. I just took 3/4 profit at 48 pips.

[Jag757]

I took final profit at 60 pips. You don’t get these every day. Look for a Fibonacci retracement after the down move hits support. There may be another chance to get in on this trade We have broken some pretty strong support on the 4 hour with one minor support ahead. Look for that at the low of Friday.

[Jag757]

Here is a great tip for traders that is guaranteed to keep money in your pocket. When you get to this time of day and the market is only moving few pips at a time. STOP TRADING!!!

Unless you are an excellent scalper and are trading enough money that one or two pips can make you some money, there is absolutely no reason to trade this type of market.

J

The advice is free as always! But savings are priceless!

[Jag757]

This is what I have going into the evening and London session. I have no bias whatsoever but I still have some pretty solid trend lines. I will probably trade in whichever direction they are broken.
4-hour GBP/USD chart with your trend lines and indicators: It would be wonderful to have some questions or participation of some kind.

1. Trend Lines:

• We have a descending wedge pattern formed by two converging trend lines.

• The price is currently testing the upper boundary of this wedge pattern, indicating a potential breakout or rejection.

2. Support and Resistance Levels:

• We have marked key horizontal support and resistance levels. The price seems to be oscillating around these levels.

• The most recent significant support level appears to be around the 1.2750 mark, while resistance is around the 1.2825 level.

3. Moving Averages:

• The 21-period (green), 50-period (blue), and 200-period (red) moving averages are displayed.

• The price is below the 200-period MA, indicating a bearish trend on this timeframe.

• The 21 and 50-period MAs are converging, which might suggest a potential crossover, indicating a shift in momentum.

4. ATR (Average True Range):

• The ATR is around 0.0040, indicating that the current volatility allows for a 40-pip range on average.

5. RSI (Relative Strength Index):

• The RSI is around 48.55, which is neutral but slightly on the bearish side. It’s neither in overbought nor oversold territory, allowing for movement in either direction.

6. MACD (Moving Average Convergence Divergence):

• The MACD shows a slight bearish momentum as the MACD line is below the signal line, but they are close together, indicating potential consolidation or a weakening bearish trend.

Analysis:

• Price Action: The price is currently consolidating within the descending wedge pattern. This pattern typically resolves with a breakout in either direction, but given the context, a breakout above the upper trend line could indicate a bullish reversal.

• Momentum: Indicators like the RSI and MACD are currently neutral to slightly bearish, suggesting that the momentum is weak and could shift based on upcoming price action.

• Key Levels to Watch:

• For a bullish scenario, watch for a break and close above the upper wedge trend line and the resistance level around 1.2825.

• For a bearish scenario, a break below the lower wedge trend line and the support level around 1.2750 would indicate further downside.

Given the current market conditions and the technical indicators, it would be wise to wait for a decisive breakout or breakdown from the wedge pattern before making any trading decisions. Keep an eye on the upcoming economic data releases that could impact GBP/USD.

[Jag757]

Here is another one. Still in it but very close to target

[Jag757]

Trade is complete and very successful. I set the Target for the the 161.8 Fibonacci level and if you look at the chart now you will see it hit that number and then immediately dropped by down. There are some things to learn from why the trade was taken where it was taken and why the target was set where it was.

J

[Jag757]

Here is another live trade for you. GBP/USD doing retracement from previous down move. Targets based on Fibonacci and 2.6 times ATR. Another nice grab.

J