29/04/15 AUDJPY: Overnight Wallachie Fan trades. 1 position, 2 trades.

20150429 AUDJPYM30 utbs4 part3 tgt hit fibs blog

Hello traders,

The majority of my trading these days is much longer term positions. However I do engage in some intra-day trading on a opportunistic basis. My intra-day trading is used to take advantages of statistically extreme moves that have begun to revert to the mean using elements of the Wallachie Fan method that I share with private clients.

Yesterday is a classic example. Whilst sat preparing for the evening session of the Veterans Trader Project I was scanning charts and watching open positions. A mean reversion opportunity on AUDJPY presented itself with a nice UTB123S which was confirmed (and triggered) by a DCS. This was also around a daily resistance zone so i was happy with the trades.

I now had one short AUDJPY position made up of two trades. One UTB123Short at 95.66 with a +17 SL and a second Domino Candle Short at 95.62 with a 16 pip stop. (The second trade was half the size of the 1st in line with RM principle)

There are pro’s and con’s to having positions run over night. This position demonstrated both of them. On the downside you have no control or oversight over your position. Anything can happen. On the upside you have no opportunity to be tempted to interfere. My last check-in had my position hit their break-even target and so the stops on both trades were moved to B/E. There was some low-impact Aus news over night and some JPY news coming out but as both positions were at B/E I was happy to let them run.

Interestingly had I been at my desk later that night I may well have closed the positions early (or even reversed) based on what looked like a bullish double bottom forming.  As it was I was safely tucked up in bed and had no chance to interfere so the trade ran on and the two trades hit their targets in the region of 94.95-ish.

The AUDJPY has clearly run much further south after my target however with these trades I’m not looking to catch a reversal, its more of a reversion to the mean so I’m happy to have a target in place and just ‘fire-and-forget’ the position,

I’m not going to deny that waking up to closed profitable trades is a pleasant way to start your day. Any trader would enjoy that. I wish that was always the case, sadly its not (and gains here were off-set by a retrace in a longer term GBPAUD trade).

Over the two trades the final outcome for the position was: +144 pips, equaling +8.75R and +3.3% for the entire position. (Or the equivalent of +72, +4.4R, +1.65% if you like to aggregate positions).

Trade well,

Paul

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About FXTraderPaul

A professional Trader and Coach, FXTraderPaul blogs about his adventures from the front-lines of FX Trading. A Trader and educator who can walk the walk as opposed to merely talk the talk!

View all posts by FXTraderPaul

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