Category Archives: trading note

EUR/SEK: closed a winner yesterday

I had a winning trade in EURSEK that I opened last week and closed yesterday. The pair broke above the bearish trendline from last November and then pulled back. I entered long at Bar1 and took profit at Bar2. The entry was a simple breakout pullback trade while the exit was based on gut feeling after the price started to pullback after a wide ranging bullish bar.

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EUR/CHF: winning trade

I had a short trade in EURCHF after long inactive period as I tried to cool off and let my thoughts settle down.
The underlying trend is still bearish and I entered short at Bar1 on a pullback after the break of a corrective uptrend line. A bearish pin added strength to this signal. The price moved lower and hit my target at Bar2 at the prior price extreme at 1.2055.


S&P500: trade comments with hindsight

Yesterday the S&P500 (SPX) had a strong trend day offering good trade signals. Even though I don’t trade the SPX I think that a brief analysis helps to understand how these trade signals work. I know that “hindsight is exact science” but rule-based trading method wouldn’t fall too far from visionary trade examples.

Trade signals:
Entry signals are provided by countertrend micro trendline breakouts with the trend indicated by the EMA20.
Short entry:
The bar breaking the pullback’s trendline is the signal bar. First entry is taken below the low of the signal bar. Second entry is taken at the low of the bar that has a higher low following the first entry bar. On the following charts I labelled first entries with 1 and second entries with 2.
Stop loss:
Initial stop at the top of the signal bar but not smaller than 1.5 points which is roughly 1.5 times the average true range of the last 200 bars (5 minutes). The logic behind limiting how close you put the initial stop is that an intra-bar pullback followig the breakout may kick you out of the position just before the price would move into profit.
Exit:
A short position is closed above the highest high of the last two bars prior the current bar.

1. The first signal came two hours after the open with an initial risk/reward of slightly better than 1:1 (measuring to the previous price extreme as a target). Exit signal came 11 bars later with a 4.60 pts profit. The second entry also offered a profitable trade with slightly less gain but the risk/reward was still close to 1:2 ex post after the price reached a new low. The small gap lower after the signal indicates that the entry was hard to execute without a few ticks slippage therefore the second entry was a safer trade to take.
2. The second trade offered an better risk/reward (nearly 1:3) while the second entry had a bit less profit. Should have been a pretty straight-forward trade to execute while two bars with long lower tail were giving an early warning for taking profit.
3. Trading the third signal would have been a bit tricky. While the first entry was not looking very decisive the the second entry was nearly at the same price level. Moreover the bullish bar after the first entry would have trapped out most of the traders entering short on the breakout so the second entry again had a better chance. I have to admit that after that long bullish trend bar against the setup taking out the high of the previous three bars I would have hesitated entering short.
4. The fourth trade had a nice signal with a bearish pin bar touching the EMA20 with a long bearish trend bar for the entry. One can argue that the pin didn’t break the micro trendline but the position and form of the setup bar was convincing enough in my view.

To sum it up, it was a study book example of a trend-from-the-open day with four trades with two of them require some discretionary judgement. I don’t think that there is problem with that. As long as there is a sound position management is place (i.e. stop loss) an experienced trader can trust his/her own gut feelings. As Al Brooks writes in his book, “close enough is good enough” when evaluating a pattern.


DAX: second losing day in a row

DAX opened with another bearish gap, pressing the channel support of the 1h regression channel

Bar1: entered long for a continuation trade on a bullish trend bar following a 3-bar consolidation.
Bar2: full position stopped at trailing stop with 7.50 pts loss and I reversed the position on the same bar selling short. Trapped out and trapped in. Big mistake. It was a failed break of the micro trendline. Bar3: short stopped with 10.60 pts loss.
Bar4: short entry at trendline resistance.
Bar5: stopped with 12.50 pts loss.

Doesn’t look good so far. Both my short entries were micro trendline failed breakouts. Bar6: short entry on lower high

Bar7: stop with 11.70pts loss
Bar8: H2 short entry
Bar9: stopped out 11.20 pts loss

Dreadful day. I was clearly on the wrong side of the market. Average loss was 10.59 pts without a single winning trade.


DAX: biggest daily loss so far

DAX started the day higher in a corrective manner…

Bar1: long entry on an inside bar breakout
Bar2: sell half of the long position, loss 8.20 pts
Bar3: exit swing part of the trade when trailing stop hit, loss 15.00 pts
Bar4: long entry on breakout after pullback, closed half on the same bar with 10.00 pts profit
Bar5: traling stop hit for remaining long, 4.30 pts loss
Bar6: missed long signal where I should have faded the EMA on a 2HM (2 hours away from the EMA trade)

At this point I had to realize that my entries were late and the trades we slipping away after the setups.

Bar7: long entry on a break above a bullish reversal bar
Bar8: closed half of the long after bearish pin bar with 4.30 pts profit Bar9: trailing stop hit for the second half of the long loss 3.00 pts loss Bar10: missed bullish setup
Bar11: short entry on reversal below the channel line
Bar12: took profit on first half with 4.00 pts profit
Bar13: stop loss hit 0.80 pts profit
Bar14: short sestup with pullback after a long bearish reversal bar
Bar15: long entry after break above doji at the trendline support
Bar16: full position stopped out on the same bar with total loss of 12.50 pts

A tricky day with 36.40 pts total loss and 4:6 win/lose ratio. I have to make note of the three good setups (Bar6, 10 and 14) that I didn’t trade.


Position management

I still have the tendency to close my winning position too early therefore I start trading two lots. I will exit one lot with my discretion and I will set a trailing stop for the other half of the position. With this method I try to stay with the winning trades that has a good run and hopefully can achieve bigger gains.


DAX trading: 19.8 pts gain with 3:1

Another solid day in my DAX trading but I still leave too much profit on the table. The index has extended its upmove from yesterday’s low with a bullish gap at the open then pulled back well into the gap testing the late swing high of the previous session. I entered long at Bar1 and closed the trade at Bar2 for 8.0 pts profit at the primary resistance R1.
I missed a perfect setup for the second part of the upleg. Bar3 was as bullish inside bar setup for a breakout-pullback entry after a consolidation of about ten bars.
My second entry was for a short trade when the index reached the regression channel resistance on the 1h chart. I entered short at Bar4 and scratched the trade with a 3.30 pts gain at the EMA20 at Bar5. It looked liket the market will show a Barb Wire (tight trading range near the EMA with small body bars that overlap) ahead of the US macro data so it was reasonable to exit. There was a bullish gap after the US jobless data but the upmove failed at the session high and I entered short again at Bar6 on a trendline break but covered the short at Bar7 as there was no follow through selling. I lost 5.50 pts on this trade.
The upmove failed at the same level again with a bearish gap followed by a wide ranging bar with a long lower shadow. I was looking for a second entry but the price action was not decisive so I skipped the break lower. I saw the S&P500 index coming lower so I entered short on an inside bar breakout at Bar8 and booked a profit of 14.0 pts at the opening level which proved to be an early exit again.
Nonetheless I closed the day with a 19.80 pts profit which is all right with me.