I did this for the futures market…but the corresponding demand zone spot forex is approx. 1.0265 - 1.0240
This is an excerpt from a trade journal I am starting. I have wanted to develop a more comprehensive picture of my trading so I can improve. As of the last 3 months, my profits have leveled off. It’s time to try to break this ceiling, so I am starting to develop a very detailed trade journal listing anything that I feel is relevent to a trade setup, both pros and cons.
The goal is to find a specific pattern or set of circumstances that either increase or decrease the probability of a trade working for me. I am making a few of these trade break downs public here…because I think they could help guide struggling traders to know the amount of work it can take if you REALLY want to improve, as well as what type of factors go into such a journal.
I did this for the futures market…but the corresponding demand zone spot forex is approx. 1.0265 - 1.0240
Trade Analysis and Trade Journal for week of August 14th-20th
Australian Dollar Futures:
Long: 1.0215
Stop: 1.0190 - 25 ticks
Target: 1.0260 - 50 ticks
trade rational: Demand zone between noticed on 5 minute chart between 1.0212 and 1.0192. If price drops and the trade triggers, it will be the second test of this zone. Reasons justifying taking a long on the second test of this zone are:
[B]Macro Picture Rational:[/B]
Price made a dramatic 1100+ tick drop in only 7 days, and has only recovered about 350 ticks of this loss so far. Sell orders seem to be exhausted considering the speed and degree of the selloff.
Buyers have supporting prices at higher and higher values (higher lows) since the 0.9900 level was hit approx. 1 week ago.
[B]Level Significance reasons:[/B]Although this is the second test of this demand zone, price eventually acheived a higher high after the 1st retest, than the origin.
This is now a daily low…and more significant than the point of origin level. the low of the asia-london-u.s. sessions (days start in asia, end in u.s. per my definition)
It is a round number level: 1.0200
It was a level of previous significant resistance around 8-9-2011 (an obvious swing high on a 30 min chart.
[B]Micro picture reasons[/B]:
small time frame (5 minute) demand zones were holding consistently on friday the 12th, and price continued to make higher lows throughout the day.
Price spent relatively little time there, even on a 5 min chart. This is concluded based on the very “wicky” bottom of the 5 min candles that first retested the zone.
[B][I]Reasons this trade may not work out (I.E. reasons not to take this trade[/I])[/B]
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it will be the second time price entered this zone, and the first time price entered, it penetrated about 2/3 into the zone before turning and moving up.
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of the 5 possible demand zones that have developed on a 60 minute chart since the 1100+ tick selloff, this would be the highest one, and therefore, less likely to hold than the other 4.
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The distance price has moved up since touching the level is only about 3 times greater than my risk point… this only meets my minimum standards.
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price does not show as smooth or fast a move up from the level as I would like to see on a 5 minute chart.
[B]Other Notes:[/B]
Depending on how price re-enters the level, I may adjust my target higher or lower… or even cancel the order altogether.
the first retest of the level could possibly “redefine” the level, which would now lie between 1.0220 and 1.0198. This reduces the probability of my trade triggering before price makes a significant move long of 80+ ticks from the closing price on friday. If such a move occurs, the likelyhood of me cancelling the trade completely is significant.
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Now, for my own personal journal, there is an abbreviated version of this, however, all of these concepts are covered. And this is the type of journaling that I will be doing for each of my “set and forget” trades from now on, and for the next 90 days. If doing this helps me succeed at a higher level, I will continue to do this level of analysis and journaling for at least 1 year.
If doing this does NOT help me improve, then I will be doing EVEN MORE work, (adding chart pictures, time period analysis, developing and introducing a quantifiable system to grade a supply or demand level…etc)
Anyway, hope this provides some insight into my discretionary trade analysis, and in turn helps you all out with understanding what it can take to improve ones results and increase trading profits in the market.
Jay
