So where did I go wrong on this trade

After much reading about what others have said in the thread about “how long does it take to double your money”; I spent a lot of time this past weekend reading and reviewing information from peoples suggestions. Today I found made my first move…but it didn’t end quite the way I was expecting it to…

In the USD/JPY currency pair…I came to the decision that the currency would go long . So I made a buy position at 95.279. From what I saw (using S/R lines and fib levels and candle stick patterns) I noticed that I could see the currency coming up to at least the 95.400 level. I set my stoploss at 95.139 and my limit at 95.400 (trying to control my MM and trader psych.). The currency dropped below my stoploss and reversed over the 95.400 limit I had set.

Should I have made a bigger stop loss? Should I have waited to see if he currency would drop to a fib level before making a long position?

Any suggestions?

What time frame are you using?

Also, I [B]never [/B]open short term trades on Sunday or on Friday afternoon. The volume is to low for the markets to be predictable.

30 min time frame for the currency pair.

Well I thought about it and that isn’t true. I look at all the time frames before i make a decision. But my actual lines and fibs were on the 30 min.

I think a 15 pip SL and TP are way too tight for S+R trading on a 30 minute chart. But I don’t trade lower time frames like that, so don’t take my word for it.

Here is what I see when I look at a USD/JPY 30m chart right now…

The light blue lines are S+R lines. S+R isn’t really a right-to-the-pip line on here, so you need to give it a buffer zone. That’s what the area between the blues line is, sort of an S+R zone.

The price just now went to the top of the zone, bounced off, and is now moving up. Plus it forms a nice lower trendline at that point too.

I see a great buy opportunity here!! I’m personally not trading it because it’s Sunday, and because it’s a 30M chart (I like 4H charts), but otherwise I’d go long right now with a SL of 94.40. Profit level would be 95.00 minimum.

Would you mind walking me through the thought process on your trade? I can’t really see what prompted you to take it. Not saying it was a bad trading decision, I just don’t see it. Even after drawing fib lines on my chart I can’t see a trade there.

Sure I’ll tell ya my thought process on it, maybe you could tell me something I over saw in my thoughts.

So I looked at the daily charts…no real clear up or down pattern, but between 3/09 and 5/09 it was what would like a struggle up and down till about mid May where the price seemed to have broken the consistent retracing of the price range tunnel.

So I looked at the 60 min charts…the price peeked at 5/28 (highest price since 5/12) and dropped again. Seeing how the market was declining after the peak, it got some support on the beginning of the trading day on 5/29 and 5/31.

So I looked at the 30 min charts…and said “WOOO…maybe I could try to use some of my new found S/R, stop loss, and limit knowledge from everything I’ve read.” This is because on 5/27 the 30 min chart showed that the currency pair got resistance and support on the same day which also seemed to be around the same place where the currency was bumping around on 5/31.

I also looked at the 15 min and 5 min time frames and it seemed good to make a long position.

So from what I read over the past weekend was that previous S/R levels are important…and from the new support found on 5/31 at around 94.900…it translated in to the support I mention I saw on 5/27. I figured hmm…then I could use the same resistance I saw on 5/27 which translated to around 95.500.

So…I made a buy position at 95.279. I used the fib level (line starting at the main resistance candle on 5/27 and ending at the support found on 5/31) 0.236 which was roughly in the 95.388 range. But the previous resistance on 5/27 translated to 95.500…I figured 95.400 would be a nice place to pick up some pips so I made it my limit. For my stop loss I put it at 95.139 thinking it would be enough of a buffer for it to move up and down.

It eventually did go up to 95.474 where it hit resistance and dropped. Apparently I didn’t have enough buffer for the stop/loss…but this was my first attempt at using the S/R, MM, riskiness, stoploss and limit information I learned from this past weekend…theoretically it worked…but not when I tried it.

I hope I don’t confuse you in my explanation :slight_smile:

I disagree. The daily charts shows a downward trend in price since April 28. We’ve got consistent lower highs and lower lows.

The daily chart is really irrelevant for a <20 pip trade on a 30 minute chart anyway. This pair goes up and down 20 pips hundreds of times per day…

I agree with you here, it did get some support, but not enough to call a trade on yet.

I agree, but don’t see a trade opportunity yet. We don’t yet know if price is going to bounce off the S+R line, break through it, or simply ignore it.

Ok, I can see your train of thought now… You’re on the right track, you just need some practice.

I think your biggest mistake was the small stoploss and profit target. They were both under 20 pips, even though you were making trading decisions off a 30 minute chart. USD/JPY routinely makes bigger moves than that on 5 minute charts! You simply can’t predict price movements that small off a 30 minute chart.

Your other mistake was trading a short term trade during the lowest volume time of the week. :slight_smile: This hour on a Sunday one sheepherder in New Zealand can make a deposit in his bank and price shoots up… (Not really, but you get the idea… ;))

Also, the higher the time frame the better when it comes to S+R lines. I don’t know any professional trader that draws S+R lines on 30 minute charts, and remember, the lines work because pro traders use them!

I’m not saying 30M S+R lines don’t work, the trade I called a few hours ago off the 30M lines would have been a winner. Just realize that daily lines are more important than 4H lines, a 4H line is more important than a 1H, etc…

Indeed more practice using these methods are needed. Everything was right expect for the about of buffer I had in the stoploss.

Usually I do make moves based on the higher frames and refer to the lower frames to get an idea whats going on in the candles. I’m mostly looking between daily and 60 min charts…the FXCM Micro Trading Station II doesn’t have anything in between…even tho it would be very nice to have 4h charts.

Right now another problem is the account is maxing out…I gotta come up with a plan on what to do at the micro account cap.

No 4 hour charts!! I’d either dump 'em or get a demo account with another broker so you can see 4H charts.

4h charts that good ay…I’m thinking about starting a demo account with MT4 to get a feel for their system if I choose to use FXCM as a broker once I’m done with the micro account. I think they have the 4h chart.

They do, all MT4 brokers have 4H charts.

I trade nothing but 4H charts. I’d be lost without them!!

I had no idea there were brokers without 4H, or at least 3H, charts. That blows my mind…

I’m using FXCM Micro account…just went through the options menu and no option for it at all…and I’m well past my account cap…whats your recommendation for a mini/standard broker?

I used Oanda to trade and an IBFX demo for charting. Oanda does not use lots, so there’s no need to worry about all the micro/mini/standard problems.

Interesting…so you choose the amount of money you want to put into the currency? I think I’ll take a look at Oanda’s service a bit more closely tomorrow.

Yes, they use what they call “units,” where a unit is one denomination of the base currency. I can control the dollar per pip amount anywhere from a fraction of a penny to a max, I believe, of $1000 per pip.


What TF did you see your fibs and s/rs on? I hope that was not less than Hourly TF.

a GOOD rule for stops is to do a 2-3 X ATR. By that yardstick, if I am trading UJ on hourly, my stop would be 100 pips. On 15 Min it would be 31 pips.

I agree with that exactly.

You can also use the Starc bands indicator - very similar operation except that they are on your chart and not separate.

I use GFT Dealbook and they have 1,2,4 and even 8 hour charts before the daily, then weekly etc.