I shorted USDCHF after a demand zone on higher levels was broke. You can see I entered on 2nd bear candle as it seemed to me be a confirmation for the trend continue to go down. What did I do wrong here? What would you have done differently if you were to enter short here?
What is to say you did anything wrong? Some trades just don’t work out - and reverse on you the moment you enter.
Remember we are dealing with probabilities here not certainties
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If I’m right, this is the H1 time-frame. A very similar set-up to this occurred at the same time on 05/11 and that would have paid out very well.
However, these trades look like they would have been taken during or at the close of the 0700 candle. This means holding across a significant market event - the opening of the LSE etc. and the sudden expansion of trading as London’s business day really picks up. It isn’t wrong to do this but its higher risk than another hour picked at random - look back at your charts and notice how many days price reversed at around 8am and how many daily forex highs or lows are printed at 8am London time.
So I don’t think your trade was incorrect just maybe higher risk than you had perhaps realised. But risk can be managed - delaying entry, scaling in, tight stops, trailing stops, limited TP etc.
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So basically I should stay away from London session opening when taking trades?
In terms of tight stop loss. Where would be the optimal SL in this trade? Lost a big chunk of my account when I got stopped in this trade.
No, but adapt your approach to the environment. Its a higher risk period of time than any other randomly selected 2 hour period so put measures in place to manage your risk. This is a high potential area for entry so its worth doing some work on your tactics.
I know. I was just wondering if entered too early or misread the pattern etc.
In terms of SL where should my SL be in this trade?
The classic TA-based stop would be slightly above the upper boundary of the pattern which generated your bearish trigger bar. Other traders would simply use the high of the trigger bar. Others would use a multiple of their favoured ATR - this is useful on its own either for setting SL levels or for checking a chart-based SL to ensure it is not so tight as to be hit by normal price volatility. Some traders would use a resistance level.
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Perhaps widening you SL will help. If you look at the bigger picture such as the daily chart, then a longer term short makes sense. Depending on your risk you could put your SL in one of 2 places.
This is where I would place them, but obviously your strategy will differ:
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I’m a support and resistance trader, know enough about supply and demand trading to be dangerous. It looks to me like price did what you thought it would but you got stopped out early when it dropped below what you thought it would. It happens, but I think there are ways you could have taken this contrarian trade successfully.
My quick analysis… I see the zone you were trading (RBR), and I see that there was a pretty respectable move up from it. You were going long, but I see several indicators that the trend reversed after testing a strong resistance area at around 0.9192. I think what you’re looking at is a bullish pullback in a downtrend. If I’m right, this would have been a trade against the trend which is really hard to do, but possible. Waiting for price action confirmation (see the bullish engulfing and confirmation) and setting a stop ahead of resistance at 0.915 might have worked.
The pullback may provide a reasonable short opportunity if that fits in your strategy. A supply zone could also emerge for a future opportunity.
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I got $100 in my account. Is setting SL on a Daily time frame optimal as it can exceed 1-2% risk. In this instance the higher SL is about 8%.
I actually went short in this trade. Seems like I got caught in the pullback to a previous supply zone smh.
No, don’t risk that much. If you can’t decrease your position size then I suggest you move on to another pair. My broker will let me trade 1 unit if I want, but some only let you trade a minimum of 1000.
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I got a cent account as well. I should probably move there.
Ah, since you were trading off a demand zone I assumed you went long. My mistake. There was not a lot you could have done about that. Price already broke through that zone.
FWIW I think I see a DBD supply zone between 0.914 and 0.9151 that may have been more useful for your short entry. Setting a stop slightly outside of it and your entry at the pullback to that zone could have been an effective entry.
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When trading such a move, I like to see the larger market context. Has that reversal hit a previous point of resistance or support?
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What strategy do u use ?
The candlestick that formed below support showed that the bears wereweakening. What you are looking for is a retest of former support now becoming resistance but that didn’t happen as the next candlestick broke right through support. You entered too early and without confirmation