Journal Entry (8/19)- This is How You Win!

$USD/CAD (1-hr chart)

I mostly journal (and comment) about my misbehaved trades. Why else but to… ? But today, I want to document a strategy I developed Friday, a mechanical currencies spread that works in volatile range bound markets.

Firstly, I already identified that #crude, risk (high yielding) currencies ($CAD), and safe-haven currencies ($JPY, $USD) are volatile and range-bound for the day. One of the sign was the sell-off loss momentum for the day, Friday, which turned out to be an inside day.

Since $CAD/JPY follows #crude, which was rebounding, I bought $CAD/JPY. However, the pair doesn’t move as fast as crude and was misbehaving. Thus, I also bought an inverse pair $USD/CAD. $USD and $JPY are safe haven currencies and in times of crisis when liquidity is demand, they tend to move together. $USD being backed by the U.S. Treasuries market and $JPY being backed by Japan’s current-account surplus that reduces the country’s dependence on borrowing abroad.

So, now I have two pairs that move in opposite directions.

I peeled off some profits first on $CAD/JPY after the pair loss momentum and set a protective stop at Break Even on the rest.

I peeled off some profits secondly on $USD/CAD (see chart) on a failed test of the 78.6% Fibonacci level and set a protective stop at Break Even on the rest.

Even though this is a spread trade, one should always exercise great entry into the trade. That is, you must have a well-defined entry and exits. Identify the range and intermediate trend.

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41 Responses to Journal Entry (8/19)- This is How You Win!

  1. lima99us says:

    I opened 3 positions prior to 6pm open of equities and oil markets. Maybe not a good idea but they’re spreds.

  2. lima99us says:

    Stops for $AUD/USD shorts got triggered, too tight? Choppy markets

  3. lima99us says:

    Use the MARK prices as the Bid/Ask could be way outta of range.

  4. lima99us says:

    The PnL I see isn’t what I’m gunna get because of spreads. Make sure to give enough of room.

  5. lima99us says:

    Had all my ducks lined up for USD/CHF but was loaded up too much on EUR/USD, should’ve took profit on half and put half in, will post later, screen snapshot in Backtest folder

  6. lima99us says:

    Ah, USD/CHF retraced the whole upleg on the 5-min chart, which is not accurate for intermediate trends. Sticking with the 1-hour chart.

  7. lima99us says:

    I would’ve took more profits if I had waited until the 6th Fib time interval to peel off. But I didn’t want to risk in this type of trendless, choppy, uncertain market situation. Should save the rest till the 6th interval now. EUR/USD shorts. My plan was to peel off and have nothing remaining by the 6th interval.

  8. lima99us says:

    EUR/USD: The red candles are short, corrective moves, thereby, should stick with conservative profit taking plan to have no positions by the 6th Fib time interval.

  9. lima99us says:

    Need to check bid/ask spreads when building positions on commodities e.g. sugar tonight. They are usually a lot wider than currencies.

  10. lima99us says:

    Risk sentiment turns positive lifting EUR/USD, in this volatile environment, profits should be taken quickly. Let’s see what happen! Respecting my stops and going to bed.

  11. lima99us says:

    The risk on sentiment could’ve gained more profits for my CAD/JPY but it was stopped out earlier. No way of crystal balling this volatile uncertainty. Best way is to take profit very quickly!

  12. lima99us says:

    Check your fire! I thought sugar was following an inside day after reading a tweet. But I was looking at a different time frame. Confirm all you hear and think. The best entry is to wait on a retracement after WS12. Fading price off the open after an expansion is a consideration (short the vertical) as the market tends to move against the previous day’s opening (news) move. Caution is necessary after expansion because this is when the most attention is given to the market by novice traders who invariably get caught in whipsaws and trendless markets.

  13. lima99us says:

    The risk sentiment turning positive was the result of European bourses making an about turn to trade higher $EURUSD

  14. lima99us says:

    The volume on $DAXU11 and $DAXU11 European bourses lack commitment from buyers. No need to tighten stops on $EURUSD shorts.

  15. lima99us says:

    Note: the EUR/USD move started at 3am London open.

  16. lima99us says:

    Had a bad buy spreads on SBV earlier at 31.11 and now took profit at 31.34 due to momentum stopping. Profit margin drastically drops once momentum stopped and price reaching a previous high (maybe double top). However, there is no significant counter-move retracing even 61.8% of the first five minute. Will look to reload on pull-backs!

  17. lima99us says:

    NOTE: Double-check with historical data (ie correlation with SPX, Crude, European bourses) to confirm whether GBP is a good measure of risk sentiment.

  18. lima99us says:

    Like the GBP before, this time the EURO is up on London hours, check later to see if it will retrace during US hours. Backtest over the weekend.

  19. lima99us says:

    Took profit on $SB too early as it reached 31.65, with none of the 5-min counter-move retracing even half of the opening 5-min.

  20. lima99us says:

    #Corn was up 1.14% overnight after filling down the opening gap (both ends of the gap are support). Didn’t see this. I believe that I can be more discipline in watching more markets.

  21. lima99us says:

    $EUR/USD did peaked out during the overlap of London close and New York open.

  22. lima99us says:

    Got stopped out on my last two $EUR/USD lots which was set above a resistance. Maybe should’ve used a 61.8% of the A wave.

  23. lima99us says:

    Got stopped out on the prev. post on $EUR/USD because I was using the Ask price instead of the Mark price.

  24. lima99us says:

    $AUD/JPY closed on the hourly above the 180 day (went long) but now losing its grip

  25. lima99us says:

    My long $AUD/JPY was enter on one signal, a conservative trader would’ve used more signals.

  26. lima99us says:

    $AUD caught bids because of the Chinese PMI data

  27. lima99us says:

    Remember to use stops immediately after the entry when switching from currencies to commodities and equities

  28. lima99us says:

    BOT +10,000 AUD/JPY @80.123
    SOLD -10,000 AUD/JPY @80.28
    Closed out for a quick scalp, momentum stopped with fresh offers, and I wanna go to bed. The 5-min counter-move has not violated 61.8% of the first 5-min of the trend. Maybe could’ve gone for the 78.6% extension. Will re-visit later.

  29. lima99us says:

    AUD/JPY did touches 78.6% extension and retraced and I didn’t even go to sleep yet LOL. Will re-visit later.

  30. lima99us says:

    Don’t forget the bid/ask spreads limit order when switching out of currencies.

  31. lima99us says:

    SOLD -10,000 USD/CAD @.9878. Convergence of moving averages on the 15-min. Crosses on the 1-hour at the top of the range.

  32. lima99us says:

    $EUR/USD got stopped out. I should not have went to sleep and manage the positions manually.

  33. lima99us says:

    Revisited $AUD/JPY and it did retraced over 100% to 80.6, missed out 30 pips.

  34. lima99us says:

    In this volatile environment, it is important to set closing stops at target levels rather than wait around, hoping for a breakthru.

  35. lima99us says:

    Gold is currently in a correction from a parabolic move up. No positions.

  36. lima99us says:

    A conservative trader should wait for a test 180-day on a fall before entering a long position.

  37. lima99us says:

    1st profit level on $EUR/USD hits. In volatile uncertain environment, it is better to set closing orders @ appropriate targets rather than sit there and hope for a follow thru. Nothing will stick until after the Fed speaks on Friday. 1st short sale target on $CAD/JPY also hits and profits peeled (bounced off key fib).

  38. lima99us says:

    $EUR/USD profit target hits but I forgot to change the stop loss and now have a long position LOL.

  39. lima99us says:

    Meaning, I should’nt have even left 1 position overnight and took profit in this market conditions.

  40. lima99us says:

    Draw in the Fib 50% retracement onto the overnight gap in $SLV

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