Welcome to another entry into my Forex trading journal & blog! Today, I’m talking through a Long trade I made in the pair CAD/JPY. Read on to see how this trade played out and what I learned from it.
Looking at the baskets the morning I took this trade, CAD had been strong for several weeks and looked like it was ready to break through a pretty strong resistance area. Yen had recently broken the lows of the range it had been in since June, and looked very weak. From an RSW perspective, this looked like a great pair to trade.
When I go to this chart, conditions looked really good. Price had made a push up through a resistance area on the daily chart, and appeared to be basing a bit on the 2 hour chart. The base also occurred near a resistance area from mid-September; so another break to the upside looked like a great sign of strength to me. There were no signs of price being extended, either.
Entry – 110.59
I set my entry order to trigger a couple pips above the most recent highs that were created before the pullback that started the base, and my stop a couple of pips below those lows. The highs price reached were the highest it had been for several years, so I had a hard time finding a target.
I knew my risk was 31 pips, so initially, I just doubled that to see where that would put my target. That level (111.21) was roughly at a key area that formed back in 2007, the last time this pair’s price was this high. I liked that level, so I left that as my target, giving my trade an exact 2 R:R.
Exit – 110.277
It took a few hours for my trade to trigger, which, maybe should be my first indication that the trade isn’t going to be worth it. When price makes moves, it typically does so quickly, so maybe letting my orders sit for so long is a bad idea. On the other hand, though, there’s really no telling when the strong move is going to happen, and I’m playing the probabilities, so actually, that shouldn’t bother me too much.
Anyway, later in the afternoon, a few hours after setting my entry order, price made a push up that triggered my entry in to the trade. About 9 pips is the most profit this trade ever gained before price started reversing.
The reversal was sustained, unfortunately, and around 3 A.M., price made it down to my stop-loss.
Conclusion
I’m honestly not sure what to say about this trade. I can’t see any glaring mistakes that I made. That said, I haven’t been able to see mistakes with most of my trades and yet they still end up losers most of the time. I realize it’s to be expected, but the big winner, or, hell, even the small winners haven’t happened yet.
Makes me wonder if my strategy is even viable. I guess on one hand I have been taking trades that are closer to being overbought/sold than not. Obviously I want the RSI to be above 50, but I’m often setting my entries at levels where the RSI is nearing or just crossing the overbought/oversold levels.
On the other hand, though (especially looking at CAD/JPY), I’m often right about the direction price will move. ~3 trading days after being stopped out of this trade, price made it up to my target. And going back a couple of weeks, if I had just opened my first trade in this pair without a stop or target, I could have made 245 pips from entry to peak price. Instead, I have three losses.
It really feel like the brokerage is hunting stop-losses, but I can only control what I can control. Technically this was the first trade in a “new” strategy — where I’m taking trades on longer-term time-frames to (hopefully) avoid getting stopped out like this. I need to get a couple more under my belt before I can really decide whether or not I should stick with it. The downside with that being that I take less trades with this strategy, so it’s going to take that much longer.
I’m trying to figure out times where I can consistently do more research and educate myself further so I can get back to profitability. Maybe I’ll come up with another, better, strategy before proving out this one. Time will tell. In the meantime, all I can do is just keep swimming.
Thanks for reading! Let me know, in the comments below, what you thought about this trade. And stay tuned for more Forex market analysis and trades.