Thanks for checking out my Forex market trading blog & journal. In this entry, I’m talking through a long trade I made in the pair AUD/JPY. Read on to see how this trade played out and what I learned.
This one stung quite a bit in the moment. It still does, but not as bad given the fact that all AUD and NZD pairs reversed HARD over the several hours after my exit was triggered.
AUD’s price had been steadily rising for about a month, and this morning, had broken a key level that had been both support and resistance in the past. There’s been a lot of chop in AUD in the past, and the range it had just broken in to was no different, but it still looked strong to me.
JPY on the other hand, had finally broken the lows of the range it had been in for a long time. It looked to me like it was finally about to make a significant push down, since the support area was so strong. I had several individual pairs picked out based on the baskets — more than I would typically like — but when I ran the numbers, none of them had strong enough R:R’s.
When I got to this chart, though, price had made strong push up and was taking out resistance levels that held up since back in early July. There was a bit of a stall in price movement happening, which looked to me like a minor base. Not wanting to miss the move since both baskets were breaking out, I looked for my numbers.
Entry – 96.05
Stop – 95.92
Target – 96.28
R:R – 1.77:1
Entry
I ended up picking a stop level within the middle of the base, rather than below the lows because A) a minor key area had formed and B) I needed a higher stop level to get a halfway-decent R:R. I think I was just anxious to trade and get something in for the week because my R:R was only ~1.8, but I put in an entry order anyway.
Exit
Price, really, only pushed up enough to trigger my entry, then over the next couple of hours steadily pushed down and hit my stop loss.
After triggering my exit, price continued down hard, losing over 150 pips in the next 20 hours. So, this was probably a bad trade.
I can actually see several mistakes I made: Trading into chop, not having a strong enough R:R, fudging my stop level a bit to force a “good” R:R, trading a heavily overbought pair and not paying attention to news events (which had to have affected this with how hard it, and other AUD and NZD pairs dropped).
I felt like I hadn’t done enough over the past week, traveling a lot, so I wanted to make sure to do something today. In my pursuit of doing something I didn’t focus, didn’t prepare, and took a bad trade. These are the mistakes I can’t make, and I need to be better going forward. I know I will.
This business is hard! Let me know in the comments what you thought about this trade, or if you were able to catch any pips somewhere else today. And, as always, stay tuned for more trading and market analysis.