22 /2/10 Sterling – 2 Trades, 2 Losses -35 points. Boo

So today I started with 3 system trades and 1 discretionary trades.  I had 3 system trades placed upon my platform and only one triggered.  A short in the GBPCHF which went a few pips positive before reversing and hitting my stop for a -15 loss.

The interesting thing here is that from a discretionary view point I felt that GBPCHF was a possible long trade.  However I decided to follow my systems short entry order but decided to scale back on the position size to the smallest amount possible.  As George Soros says; take the trade with the smallest amount you can. You can always add to it if it goes your way.  It’s fair to say that George knows a thing or two about trading so I’m likely to give his advice some credence.  Anyway trade taken, loss taken, minimal P&L bruising taken.

The second trade was a discretionary trade going short on GBPUSD.

I saw that after Fridays Rally Cable was entering an area of resistance and was looking to roll-over.  I liked the fact that my cotton trader set-up was available along with a couple of other confluence of events.  I placed an order to go short at 1.5469 with a stop of 1.5489 and a target of 1.5419.  The target was in the 50-62% area of the rally up and gave me a nice possible 50 points for a 2.5:1 reward to risk.  Fair trade.

Trade triggered and dropped nicely.  It went approx 20 points positive.  My idea was to move stop to B/E at +25.  It became apparent that there was (not surprisingly) strong support around the BRN of 1.5450.  Price bounced hard from here and moved back north of my entry point.  I did consider closing as I felt the sentiment was shifting but decided to let the trade play out.  Price kissed the trendline and dropped again back to the 1.5450 area…..which it bounced off again!  This is where I made a mistake.  The market had now shown me that the 1.5450 area was strong support. When it struggled to break that level on the 2nd time I should have either taken some profit or moved stop to B/E.  I did neither and decided to stick with my plan and let the trade play out.

It played out alright….with the BRN of 1.55 acting like a big magnet price just shot north, took out my stop for -20 and then hit the BRN before dropping.  If I’d been in the zone (I wasn’t this morning) then I would have sold the line at 1.55.  But that will keep for another time.

  The set-up was fine, I liked it then and I still like it now. What could have been better was my Trade  management. My learning points:

1. Be mindful of areas of S&R.  If price is struggling to break the area then either lighten up or move stop closer.

2. The market is always communicating in probabilities with us. Be open to it. Notice that  the lows of the candles are all higher. The market was responding to Bullish buying pressure.

So not a great start to the week. I’ve learnt from it. Now time to move on.