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1-2-2017 EUR/USD Scale Short Swing on low leq

01/02/2017

Happy 2017.

Trade:originally a short scalp on low liquidity between Christmas and NY – turned into a scale short swing trade after a large spike higher in price.  This low liquidity spike was not significantly followed by any other pairs lending one to believe it would not follow through on the eur/usd and that price would continue its short move at least back to prior consolidation.
Entries: Short 1-3 were several small short entries at prior day’s highs with short term take profit targets.

Entries 2: Short 4-5 scale short on the liquidity spike and on prior fib retracements

Entries 3: Short 6-8 Additional scale short on overnight low liquidity spike – entered manually on phone trading and included appx 10 pips of slippage on each trade (adding up to a significant amount) / when trading in low liquidity conditions with a faster moving market, consider entry orders when practical rather than market orders especially on the mobile device.  The last trade #8, I placed just to verify the amount of slippage.

Target:  Final target was a frontrun of the .618 retracement of the most recent minor swing move higher on m5 chart shown below.

Generally, I would target a little higher on the fib for this trade, but the H4 chart showed a significant breakdown and close of prior lows with the next sensible target being prior h4 highs and .618 retracement of the move higher.  Breakdown of shaded area shown on the graph (top shaded area) and target of lower shaded area also shown.  (chart 3 below)

Pips: -35-10+7+22+55+74+81+87 = 282 (non weighted for position size)

20/20 Hindsight: Would not recommend this trade setup under normal market conditions.  This is a good example of the importance of knowing the market you’re trading.  This trade was taken with low position size and acceptable risk management.  The only reason I was comfortable adding to the position on the spikes higher was because of the christmas – new year market conditions.  There was a high likelihood the move higher would lack followthrough and would retrace significantly rather than begin a new impulsive move to the long side.

Final exit appears appropriate.  May consider the aforementioned price / m5 crossover for a more aggressive take profit rather than standard take profit on favorable levels.  That would require additional trade management however and we can’t be watching the markets all the time.

In this instance, that exit would have yielded appx 13 additional pips.  Something to think about.

Also, consider revision of policy of not trading between new Christmas and New Years.  This was a nice move.

Chart 1:  h4shows initial shorts on prior highs for small move to the short side and additional entries higher

025 - 01-02-17 h4 EURUSD Attempt short at consolidation, re short higher levels.jpg

Chart 2: m15 – Closeup of additional entries showing scale short

026-01-02-17-m15-eurusd-scale-short

Chart 3: H4 showing price breakdown of top shaded level, sig. trendline break – at the time, any potential short term upside moves (overnight / London open) looked like we could reasonably expect them to be limited to short term h4 consolidation in the preceding few candles.  (who knows if that’s reasonable or not, but it worked so that’s cool.)  Take profit was a fairly aggressive level in terms of length of move. But at the time it appeared to be the the most sen sensible place for price to meet resistance perhaps prior to NY open.  Considering the last bit of this move played out as expected we can call it a successful trade though not ideal.

027-01-02-17-h4-eurusd-why-i-didnt-close-on-the-5-fib-retracement-breakdown-of-shaded-area

Chart 4: M5 – final take profit of trade on the .618 retracement of prior swing move higher.  Also shows how the price / m5 ma crossover would have given a few more pips. (appx 13)

028-01-02-17-m5-eurusd-final-tp-on-frontrun-of-618-ret

Chart 5: M1 (don’t trade off M1 charts, but included here to show entries) – price slipped on those last 3 entries by appx 10 pips each.  Likely due to mobile device trading combined with market orders.  At least on the mobile device, price, the graph and entries don’t line up as well as they should when price is moving quickly.

028-1-01-02-17-m1-eurusd-final-scale-short-w-10-pips-slipp-on-low-lequidity

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