Welcome to my trading blog. This is where I share my trading journal, my thoughts on the markets before I get in to trades, and my analysis of my performance. Today, I took a short trade in the Euro-Aussie pair in the Forex market. Read on to see how this one played out.
EUR/AUD Short
Expected Entry – 1.6425 Stop Level – 1.648 Target – 1.6343 R:R – 1.5
I like this to the short side, but there’s something I want to mention as I enter this trade. If I set my stop above the highs of the rally, I’m looking at a 55 pip risk and a 1.5 R:R; which isn’t what I’m looking for (if I had a 55 pip risk and a 2+ R:R, I’d be okay with it, though).
If, however, I set my stop at the current price — 1.646 — My risk drops to 35 pips, which increases my R:R to 2.3. I think I’m comfortable with that because this level was a key area early last week. And, it’s still a 35 pip risk, and not, say, only 10 with a 3+ pip spread.
I think I’m willing to take that risk now, and I can always cancel the order. Oh, and I’m picking my target using the fib retracement level.
I had two orders open, and price on both pushed well up above my stop. I decided to hold to see if maybe price would still reverse — I still liked the key areas that I had my orders set around, so I left them open longer than usual to see if that strategy would work out for me.
Eventually, nothing happened in my other trade, so I cancelled that order, but EUR/AUD is somewhat basing (if you focus on the bodies of the candles). It’s hard to say. I’m on the 4 hour chart and the current candle is pushing back down. It’s approaching the key area that was resistance earlier — and would’ve been my stop level if my trade triggered earlier — that’s now acting as support.
Modified Order
Expected Entry – 1.646 Stop Level – 1.6488 Target – 1.64 R:R – 2.1
Despite the long lower shadow that made up the last candle, this still looks pretty weak. I’m considering putting in another order around this base that’s forming now. The spread isn’t wild right now either and I still have a pretty significant stop level, so I want to do it. A part of me feels like I’m trading just to trade, maybe? It’s something I had the idea on earlier, and I’m just re-tooling the trade. It’s 1/2 a percentage and I need to not be afraid, so I’m going to do it. I’ll be back with the results when/if it triggers and after it closes.
I’ve set the order now, and dropped down to the hourly chart to see how close it was. On the hourly chart, there’s a bit of a bull-pullback forming. If price was heading back to the upside, this would be a good place to get in. It looks like one of those scenarios where I want to put in an OCO order, but I’m not able to right now.
I want to figure out how to implement that into my trading. Either by just opening two orders in the platform now, monitor closely and close the opposite trade manually. Or use a different broker that allows for that type of order. I’d prefer the latter, but we’ll see. Stay tuned to see how that ends up playing out.
Entry – 1.64599
Price was moving as I was placing the order, so it ended up triggering pretty quickly. Immediately, it looked like it was the wrong decision. Price hovered a little above my entry, and after a couple hours ended up pushing up close to my stop.
It didn’t hit my stop, though, and my work day was starting to wind down. I set a couple of alerts — one at the lows before the rally occurred, creating that long lower wick on the 4 hour chart; and one at 1R. I figured I’d move my stop when it got to those initial lows, in case that was a strong support area; but if it was moving strongly enough, I could potentially wait for 1R.
With my alerts set and other work taken care of, I finished my work day and largely relied on notifications to keep me informed about this trade. After a few hours I hadn’t gotten any notifications, so I wasn’t sure what to expect (I didn’t fall into the trap of immediately thinking it was a good thing). I looked at the chart on my phone and once again price had gotten up to near my exit, but hadn’t actually hit it; but price was still sitting above my entry.
There was nothing I could do at that point, so I continued to let it ride. I got in bed, and thought again about the fact that I hadn’t received any notifications about this trade. I checked the charts at that point, and price was down near those initial lows; in fact, shortly after checking the chart my initial alert hit. Since I was going to bed and had no way of monitoring overnight (and price didn’t push down as quickly as I hoped) so I moved my stop to break-even at that point.
Exit – 1.64599
I woke up this morning to discover that my stop loss had been hit at break even. Price ultimately pushed to exactly 1R, but that’s the furthest it dropped. It’s been rallying since. I guess the positive takeaway is that I managed it well, and a break even is a win.
On one hand, if I’m trying to catch new trends early, this is the exact type of opportunity I’m looking for, and breaking even is not a bad outcome. On the other hand, zooming out a bit to the daily chart, my entry was roughly at the MAs, which are touching and now sloping up. Longer-term, this is a lot of what I’m looking for in a bullish continuation play. I could certainly argue more strength in this prices future, and price has been up a good amount so far today. Maybe I should’ve been looking at this long the whole time.
Conclusion
All that said, price was down pretty strong, and pulled back in a way that didn’t really suggest more strength was coming. Anytime any buying did come in to the pair, even more selling came in quickly. Shorter-term (which is my time-frame — I don’t want to hold for multiple days or over weekends), it’s definitely fair to say there could have been a lot more weakness in the future for this pair; it just didn’t come to fruition.
Overall, I like what I saw in the trade, I liked my entry and the overall pattern. I liked that I entered without fear, and how I managed the trade. I feel good about this one, and I wouldn’t be upset if I found a lot more opportunities similar to this one.
Thanks for reading! What did you think about today’s trade? Not losing money is a win, right? Leave a comment below. It wasn’t the best week of trading, but certainly not the worst — and my portfolio continues to do well. Can’t complain so far about 2024. Come back next week to see more analysis and trades!