I took a 2 week break from blogging and trading after a big loss 2 weeks ago. During my break I was still trading but decided not to post because the markets were so slow and boring. During the FOMC statements and French elections, markets were too boring to constantly trade, in fact, I lost money by forcing trades. I’m back now and ready more than ever. Hopefully the markets can wake up and some good trade formations can form.
I made a terrible, amateur mistake once again… Before I went to bed, I noticed USD/JPY setting up for a nice break out triangle. This “triangle” shape within price action indicates pressure building up, followed by an explosion in either direction; up or down. The mistake I made during London session was getting into this triangle a bit too early. Usually, the smart thing and safe way to trade a break out is by having pending orders on both above and below the triangle to catch the big movement. I made the mistake on entering my position too premature. Price wasn’t even breaking out, in hindsight, I’m not sure what possessed me to enter so early. I ultimately got a loss on my long USD/JPY trade, AND missed out on the ultimate downward explosive move. I was too excited for the move that I got too impatient…
The green arrow shows where I longed the pair, the red arrow where I should’ve had a pending order to short.
A great trader knows when to be cautious and when to be very aggressive. It’s during key moments that a profitable trader will know when to dial the aggression at opportune times. Since yesterday’s loss on chasing dollar, I figured I short the dollar and go with trend. This was a mistake because just when I had enough wounds from counter-trend trading, the market decides to do what I predicted. Eventually I took the right side of the trade, BUT it was very small and quick due to fear of being wrong. I’m still getting used to Oanda’s new charting system and platform but that’s still not a valid excuse for my losses. I’m definitely stressed out and will take the long weekend the refresh my mind.
Today’s London session should’ve been a session where I just slept in. This London session was just trap for bear and bulls. I was growing impatient and tried to trade the EUR/USD and USD/JPY while nothing was happening. Luckily things started to move during noon in NY but at that point my day P/L was too damage to trade it heavy… Here’s a tip, when market is ranging, don’t trade.
Here’s the ugly hour candles for EUR/USD on London to NY.
Today was a very exciting day when the euro unexpectedly took off with the EUR/USD flying a shy of 200 pips for London and NY. Although the dollar was falling a bit, the majority of the move was the power in the euro. The pound stayed relatively the same while USD/JPY took momentarily dip and the Aussie and New Zealand dollar both had a mini rally as well. But certainly, today’s spotlight was on euro.
Unfortunately, I was not quick enough to catch the flying EUR/USD. I wasn’t sure what was driving the euro so strong and it just felt too wrong to short the dollar especially after it’s monstrous rally. I lost some pips shorting the USD/JPY a bit too early, however, I did short it again which I will hold overnight. I think it’ll take a couple more sessions to see if the change in the euro is an actual reversal, however, it did have it’s best day since June.
Price action in the market was very unstable and liquidity was very quick to dry up toward the end of the session. However, the Dow broke a record of 19,000 today thanks to the Trump rally. This truly shows that U.S dollar and equity is really sought after and probably the most stable economy right now, despite our minor problems.
I held a short USD/CHF trade overnight which got stopped out. I should’ve known better to bet against the dollar, but the technical analysis was there. I also made a rookie mistake today by chasing after GBP/JPY shorts. Although I would’ve been positive if I held the trade, due to the low liquidity, prices were very jumpy. Holidays are always bad for price action.
Here’s the ugly GBP/JPY short that shot up which soon plummeted down to tease me..
Fed chair Yellen testified today before the Join Economic Committee in Washington D.C. Her statement was hawkish stating that economy is making good progress, employment is improving, and that raising rate hikes too late may even cause a problem. December rate hike percentages are up to 96%, which is most likely probable. It’s shown in the raising dollar, but so many events in 2016 happened where the least probable outcome came forth in the end, the U.S election and Brexit to name a few, so who knows.
I let my excitement and emotions get the best of me and longed the USD/JPY and shorted the AUD/USD as soon as I woke up in pre NY. The markets were obviously moving in a funky manner ahead of Yellen’s speech. The dollar pulled back a lot more than I expected and took both of my trades out for a medium size loss. Thankfully I was able to make it back and finish the session just above break even. It would’ve been a great day if I hadn’t jumped the gun too soon.
People who have underestimated the dollar were in for a surprise. USD/JPY once again continued to make new highs of 109.300’s where other dollar pairs were under control by the dollar bulls. It’s no surprise to see so much buying in the dollar as we approach December since the Fed’s opportunity to hike within this year closes. The election is also over which should help the Feds in raising rates.
My main trades were USD/CAD shorts but it was a trade I wish I just held through. I tried to get in and out of trades, scalping through profits, instead I should’ve set and forget with full trust in the dollar bulls. I’m always apprehensive on jumping on the bandwagon during a nice trend because of arriving too late. My fear is that once I commit to the trend, it’ll start to reverse.
The dollar’s strength continued from Friday to Sunday opening. EUR/USD and GBP/USD both made new lows, while USD/JPY broke 108’s with confidence. Unfortunately, the excited dollar bulls came to an abrupt stop mid way and actually reversed into a dip. The dollar couldn’t find anymore buyers, but I’m sure this is not the top for the dollar; just a small pullback. Draghi was also scheduled to speak today but didn’t mention anything new.
My day went fairly well today until I lost my gains trying to long the dollar on the dips. I thought the bullish trend in the dollar would continue but kept getting stopped out. Also worth nothing that the -$10 was deducted from FXCM as their monthly balance requirement fee. If a standard trading balance is lower than $5,000, FXCM will deduct $10 every month which forces you into switching into their mini account. A mini account wouldn’t work well for a scalper like me because the spreads are too high. I think it’s a ridiculous requirement but I still enjoy the small spreads in my standard account.
It’s been difficult to push the dollar lower all except one pair, GBP/USD. The pound’s rally seems to be a continuation of the delayed Brexit. Certain sectors such as banks and finances are rallying after the election while tech stocks are taking a hit. It’s still too early to predict how this election will affect the markets in the long run.
I’ve been scalping USD/JPY shorts in the hopes to catch an early reversal but it does not seem to plummet down. I’m experimenting with a new charting platform and also with tick charts compared to time interval candle sticks. The difference between tick and time is simply that tick shows the change in movement in price while time candle stick shows the change in price within a certain amount of time. A tick chart seems to paint a clearer picture in a short time frame analysis, which is more beneficial in scalping.