USDCHF H4 Short Trade - Win

USDCHF H4

This may be a 1R+ trade but I'm not happy with it at all. I took the trade based on M30 PA. The reason why I did not touch trade this is because the supply zones are stacked, which means price could easily shoot through the bottom zone to hit the top one. As such I waited for PA before I took the trade, which came in the form of multiple rejection wicks/pin bars on the M30. I was very aggressive with my stop loss and placed it above those wicks rather than the entire supply zone, this gave me a very tight 27 pips stop loss.

Because the market was up trending when I shorted it, it is hard for the mind to believe such a big move down is possible. When I took the trade, I kept telling myself better be careful with this one because it is counter trend. I managed to persuade myself to TP when price formed a M30 pin bar off a M30 demand zone. Now herein lies a very important lesson. If you took a trade based on a H4 zone, DO NOT TP early until price hits an opposing H4 or higher zone. If your read is right, price should do just that. This is how many professional traders make tonnes of money, they enter as a scalper but hold as a position trader. They find low risk opportunities to take a trade on the LTF, but select their target based on the HTF.

What I should have done was to simply move my stop to BE instead of TPing early. Again I broke my own rules and got shaken out early. Look at that sharp move down, my simple rule of trailing the stop behind each supply zone would mean I have at least 6.5R of profits locked in now. In fact, I would have been 12R in profits at the lowest point. A freaking 24% increase in the account.

I also want to take this opportunity to discuss a very popular method of trade management - Taking partial profits at the first trouble area and trailing the remaining half. Two of the best traders I know (Redsword and Julexo) do that, many others do so too. However I'm still not convinced that it is the best way to manage a trade. No doubt partial TPing is very mentally and emotionally assuring as you're guaranteed of a winning trade. However, I believe that expectancy wise doing so is inferior to trailing the entire position. Just look at this USDCHF trade and my previous GBPCAD trade. Trailing the entire position would have resulted in a lot more profits. Indeed I will have a lot more BE trades if I do not partial TP, but I truly believe the profits from these runners will be far greater than those who only let 1/2 or 1/3 of their position run. Again who am I to correct those legendary traders, but like everything in life, the way to convince yourself of something is to test it out yourself. That is what I'm doing, if over time I'm convinced that trailing the entire position is more beneficial for the expectancy than partial TPing, heck that is what I'm going to do.

Each day goes by with me believing my dream is possible. The greatest obstacle to that is the man in the mirror, because I keep sabotaging my trades. The thing is this, we need runners to offset our losses and create that massive growth in the account. It is of paramount importance that we really let our winners run. How many more times must I commit the same mistake before I conquer this fear?

AUDUSD 1H Touch Trade - Lose

AUDUSD 1H

Nothing much to be said about this except that I should have taken this on demo instead of live, considering that I'm new to touch trading and have not proven consistency on it yet. I'll refrain from touch trading on my live account for the time being.

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Edited: Another trader's view on what went wrong with the trade:

EURCAD 1H Bearish Engulfing Trade - Win

EURCAD 1H

To be honest I'm quite disappointed with the outcome of this trade. In all honesty, my original plan was to just let the trade run as I was very confident it would hit the origin of the first compression. That would have been like 2.5R. I only decided to TP 1/3 at the S/R flip level because of my super hate to lose egoistic personality, it wasn't even a major S/R flip! In this case it worked out well but also revealed that my profit targeting skill is inadequate. I'll touch more on that in a separate post... Well I wouldn't know whether price will fall back down again but there was no way I was going to take my chances with such a strong rebound. We can only take what the market wants to give us regardless of where we think price should logically go. Here I would rather get out with my small profits first and reevaluate.

I want to just briefly describe the merits of this setup. I seriously think it is A+. Fake breakout + PA bar + Compression + Supply zone + BRN + Divergence + Double top, it is hard to beat that. When I was nearly stopped out by the triple top, I told myself this is a setup I would take 100 out of 100 times even if it ended up as a losing trade. When the triple top + pin bar formed, I was like oh man this is it, its like free money. This is something you see only once every few weeks or maybe months, and I'll be totally shocked if it failed. I discussed about this setup before here and it is one of my favorite setups. Shorting the triple top pin would have resulted in a better RR trade than mine, taking full profits at the S/R flip level would have resulted in a 1+R trade. This chart really demonstrates the potency of this setup.

EURNOK 1H Pin Trade - Loss

EURNOK Trade

Honestly I was royally pissed with the outcome of this trade. In summary, I moved my stop to breakeven once I was about 0.5R in profits. However I was hit by a broker spike overnight which took me out for a whooping 0.42R loss. A freaking 300 pip spike, insane slippage, worst I ever had. I checked with three other brokers and while some did had a mini spike, it was nowhere near 300 pips. Look at the FxPro MT4 1H chart above, notice that the spike wasn't even there!

It annoyed me big time and I was about to call up my broker when I remembered that such things happen very often and there is no way to win the argument against the broker because Spot FX is unregulated and they're protected by written agreements.

As such, all I could do was to simmer down, reflect about it, and come up with two conclusions. First of all, I'm going to switch broker. Let me first shame this broker's name, it is CMC Markets. I checked through many of their charts (particularly the exotic pairs) and was shocked to find that such ridiculous spikes are very common. It is very obvious that the market maker is trying to gun the stops of their clients, they can easily do so because our orders are on their books and they know exactly where the stops are. How timely it is that I already set up a new broker account and had planned to switch to it in June.

Secondly, I'm going to stop trading illiquid/exotic pairs. I gave some thought to it, and asked myself this question: If I had ten million dollars to trade, would I be trading illiquid pairs? The answer is no, simply because of the risk of such black swan broker spike events. When one is managing huge sums of money, risk management is paramount and there is simply no room for such crap at all. I need to think and trade like a huge account trader. The majors and main crosses should provide me with enough opportunities that I do not need to undertake unnecessary risks with illiquid pairs. I guess you could say that it is a blessing in disguise that this happened to me now than in future when I'm trading a larger account.

CHFSGD 3H BUOB Trade - Win

CHFSGD H1

Pretty much stated everything I wanted to say in the journal entry. Again do notice how sharply and quickly price shot up the compressed down leg to the origin of the compression. This is because pro money has removed all the supply on the way down and there was no supply at all until the origin of the down move. As such there is nothing to stop price from shooting up. In fact there're a few other compression examples in the same chart, can you spot them? :) Compression has changed my trading, seriously it is such a powerful tool to have. There are some more points I want to add but I think I'll mention them in my monthly review post as they are stuff I've been thinking a lot about which deserve a post of its own.

USDTRY Daily Pin Trade - Loss

USDTRY Daily

Honestly this trade left me in shock. Normally when a trade fails, I'm able to identify the reasons during my post mortem. There is usually at least one reason, no matter how minor it is. However in this case I can't seem to figure out why. This is the best setup I've seen for many weeks, I absolutely loved it and was so confident that I didn't even wait for the break of the pin bar to enter it. I also risked 3% instead of my usual 2% on the trade because I wanted to try out dynamic money management - risking more on better setups. Needless to say that means I just lost 3% and I'm still feeling quite sore about it.

Price just shot up and broke through every single intraday resistance. In fact I saw many supply/demand setups as price was going up too. There was a nice Quadsimodo setup and a Sam Seiden setup that fulfilled all the Odds Enhancers. I really do not know what the heck happened, maybe exotic pairs just behave wacky. I know one thing though, lots of people got killed with me in this trade. I know because the moment price went above the pin, prices shot up like mad and the tick volume literally rocketed. This was the cascading of all the stop losses of the shorts like me who had their stops above the pin. I even suffered a 2 pip slippage due to the lack of liquidity during the spike. Oh well, gonna ask some guys for their critique on this trade so I can learn from my mistakes.

USDCHF Daily Pin Trade - Win

USDCHF M15 and Daily

I think this was a decent trade. Traders who chase overextended moves/breakouts into supply zones are often retailers, and retailers always lose. The plan was to ride on them being flushed out of their breakout long positions. I just wished I had managed the trade better, in hindsight I should have taken full profits at the major trouble area, especially when the lower time frames showed huge signs of reversal. I wanted to try out a trailing stop in case a miracle happens and the support breaks, but I guess that was too risky with such a strong move up.

And here is the thing, an experienced trader will be able to tell whether a support will hold or break, or where price is likely to go, or how to trail a position properly. Those are my weaknesses still and I'm trying hard to work on them. I've had the good fortune of getting to know a few RTM members, they've been very helpful and have taught me a lot. Every week the movements of the markets are becoming more logical and less random. In summary, price ALWAYS bounce off either a supply/demand zone or a S/R level.

USDCAD 1H BEOB Trade - Win

USDCAD H4

USDCAD H1

Right so with this trade I'm up about 4% so far with 8 wins out of 10 trades (though many are BE and some deserved to be losers), on track to my monthly target of 5%. Again I need to remind myself to be disciplined disciplined disciplined.... All I need is two stupid trades and I'll be back down to zero. That happened last month and taught me that I must never take any trade lightly, especially after a winning streak. I still feel there are a lot of market structure concepts which I don't understand, concepts that will enable me to have a much better understanding on how price moves. That is not something to be underestimated; a trader who has that knowledge is able to hold his trades through huge pullbacks knowing that they'll eventually hit his target which could be many Rs away. Right now at the very best I can only identify PA setups that I know have a high chance of hitting a nearby trouble area, beyond that I'm clueless. As such my profits are often less than 1R. ReadTheMarket is a treasure trove of quality information, I need to dedicate more time to studying and digesting its material.

CHFSGD Daily BEOB Trade - Win

CHFSGD Daily

So here is the first entry of my trade journal. I'm not very happy about this trade, for the reason stated in the screenshot. While it is not my fault that I failed to notice the S/R flip level until I'm in the trade, I still think that I'm not disciplined enough. The past few days have been very dull and I could feel the itchy fingers syndrome sneaking up. I need to be razor sharp focused, patient, and disciplined at all times. I have to trade like a sniper, I cannot afford to be hasty. I'm not a bad trader if I go for days without trading and everyone else is killing the markets, I'm a bad trader if I start taking sub optimal trades just to feel part of the crowd.

Pranti's PDF really reminded me of a lot of things, and I need to be even more determined to only take the very best trades with a good R:R ratio. I do believe that there exists a feeling of absolute confidence that a trade will go well. This feeling has only occurred twice for me this month - AUDNZD and GBPCAD trades. When I took those trades I was very relaxed and not anxious at all. It was as if I knew for sure the trades will work out, and they did. I need to only take trades which give me this kind of feeling. Such is the selectivity and discipline that is imperative to being a good trader.