I’m creating this thread to ask you guys how if you think there is anything I could’ve used here to turn my 20 pips into the 100+ pips that was possible.
Yesterday, I was having a look at the EUR/CHF and drew the following TLs on a 4hr chart - link.
Then I checked on a 1hr chart and saw that it was testing the DTL and that the UTL wasn’t too far away. I thought that using RSI, I may be able to pick when it would fall short and gain around 20 or so pips before it hit the UTL - link.
I decided to look at a 5min chart. On this chart, the green line is the outer TL (the one drawn from the 4hr chart) and the blue lines are the ones drawn on this 5min chart - link.
My criteria for entry was that as soon as I get a close over the UTL on the 5min chart for both the RSI and the price action, then enter for short. It did this and I got an entry of 1.3384, with a stop loss at 1.3394 and a profit target at 1.3364 (20pips)
After about 4 hours, the 5min chart displayed like this - link.
As you can see, I reached my 20 pips target at 1.3364.
I have since checked the price action this morning and it’s gone down as far as 1.3260 - which would’ve got me 120 pips.
My questions are:
Is there any way I could’ve predicted it was going to go down this far?
Is it not logical for me to think like this as my intended target was only 20 pips and I should be greatful that my plan worked out instead of trying to think of greedy reasons why I could’ve got more?
What do you guys think of this trade? Anything you can see that I did wrong or things you think could help me?
Look at it fundamentally. Price is going to move from the daily high to the daily low or vice versa. This is profound. It means that the daily ATR will correctly anticipate that price will move a distance equivalent to the ATR (any period) 50% of the time (high to low). In other words, if you’re entering long, and the previous extremum of the current day is significantly lower than your entry point, you’re not looking at good risk/reward. Greenhorns will chirp “buy low, sell high” without really understanding the principle, but it’s an elementary aspect of the market.
There could be a trading system right there, maybe I should have made the upper one red, middle one orange, lower one green then it could be like traffic lights, if price stays below the lowest(green) one the signal is green go go go !! if price crosses up and breaks the (middle) orange one its warning, might be worth considering taking profits, if it goes up and breaks the upper one (red) its stop right there close out the trade before it makes a loss, what do you think ?
I normally look for the week outlook to confirm the trend.
I also look for the news that coming along in that week if it is positive or negative to the currency I trade. That’s my thought.
I guess you could say its simalar to the koala system but only in that it uses 3 moving averages, the koala system uses 3,6 and 9 periods smoothed MAs to the median price and the trading signal is the crossover.
The image I posted is also 3 MA,s but they are 21, 34 and 55 periods, LWMA aplied to close price and my traffic lights idea is not something that is a part of the koala system, I had another idea to improve it a little, how about this,
21 periods MA green, if price stays below that its go for more profits,
34 periods MA orange, if price breaks it, slow down, take part profits
55 preiods MA red, if price breaks it, stop, close order.
entry signal could be either your own existing method of determining entry points or the 3 MA cross, exit point would be the reverse cross. I might trade mini lots on this for a while and see how it does. I changed the colors to the proper ones.
Might help if we all look at the same currency pair… EUR/CHF
You could maybe look at trading more than 1 lot but of course keeping your % risk the same. In this trade you would have been able to target your initial 20pips with your 1st lot, then manage your 2nd lot by moving your SL and locking in more pips until you reach another target or get stopped out.
