Welcome to my Forex trading and investing blog. This is where I share my thoughts on the (primarily) Forex market in the morning’s before I trade; as well as talk through the actual trades that I make. I just closed a trade that I held on to for way too long according to my plan and rules — I had a somewhat interesting week, so I just continued to hold on to the pair. Read on to see what happened with this trade.
GBP/USD Short
Expected Entry – 1.2614 Stop Level – 1.2644 Target – 1.254 R:R – 2.5
When I got to this chart the morning before I pulled the trigger, price had recently broken a strong support area, and was seemingly retesting that area. Here are my notes from that morning:
This has largely been moving sideways over the last month-and-a-half, but the lows were broken pretty strongly at the beginning of this week. Price pushed down a ton after breaking those lows, but the drop only lasted about 1 – 1.5 days before price made a strong rally. That rally only got up to the prior lows, though, and price seems to be failing at that level.
Price action has been kind of wild here, and this might be one of those scenarios where I’m shorting a high-base, which I had tried to avoid in the past, but I feel like has worked out more often than not, so I’m going to try not to worry about that.
If I want to play the re-break of the lows, though, price is actually currently about 20 pips above the breakout area, so I think I’ll do this as a long-term play. I think to those lows there’s at least 80 pips, so I think I’ll just trade this on the 4h chart with a 30+ pip risk. Actually, there is a base on the hourly chart and it’s almost exactly 30 pips wide. I’m going to play this base and that would be taking GBP in two different directions. I’ll cancel the opposite order than the one that triggers if it comes to that; or I’ll just cancel the other one because I like this chart better. We’ll see what price action continues to show me.
Entry – 1.26137
I planned on this being a long-term play, so I was comfortable leaving the order out after I finished my work day. I went to bed and woke up the next morning to a notification that my trade had been triggered at around 2:45 AM.
Exit – 1.2644
When I looked at the chart the morning of the 8th and saw that the trade was triggered; I also noticed that the move put price well in to profit — at least touching 1R — but was up to about .5R at the time. The weakness seemed sustained, so I decided to wait until price reached 1R again to move my stop. It seemed like it was retesting my entry, so I thought that was reasonable.
Looking today, that initial push down actually put price fairly significantly below 1R; so maybe I should’ve moved my stop then? Regardless, going forward, I’m going to make sure that I draw a 1R line on each chart so I know for sure whether or not price reached it. But I digress.
The weakness did not hold, and price continued to rally until it got near my exit; but my stop-loss never triggered. By Friday, price was hovering around a level that would be -.5R, and I considered just closing the trade. I figured I could cut my losses and start fresh on Monday.
I was traveling on Friday, though, and I hadn’t packed so time got away from me. By the time I remembered I wanted to close the trade, the market had closed for the weekend. I failed to act, and was forced to hold through the weekend.
Days Later
I was fortunate enough to go to the golf tournament in Phoenix this year. And it was there, watching the 16th hole, that I got the notification that my stop was hit. Truthfully, I expected it; but I of course hoped price would push back down at the open.
Price did actually manage to reach my target, but that was days later, and after price had reached a high well above my stop.
I knew well in advance that I was holding this for too long. And small mistakes — not monitoring closely, not locking in profits when I probably could/should have, not cutting my losses when I recognized my other mistakes — caused me to take a full loss here.
Overall, this was a good trade when I took it, and it should have ended up break-even. I need to be better. I can’t go back, though, so I’m going to brush this one off, move on, and look for my next trading opportunity!
Wish me luck in the comments below. Or, if you’ve got any words of advice or encouragement, leave those in the comments as well. Thanks for reading, and stay tuned for more trades and analysis!