Today turned out to be a great trading day. A good part of the reason why it was so great was directly related to having a disastrous start.
The minute I opened up my trading platform I spotted that price was bouncing off a strong support level at 1.4410. I was in like flynn, even though I hadn’t done any pre-session analysis. In addition my trading platform was on the wrong profile and my trade size was incorrect.
I have various profiles set up in Oanda. I have one for my scalping, another for my screen grabs I use on this blog and others from times past. When Oanda starts up it defaults to the screen grab profile as one of the first things I do as part of my pre-session analysis is to take a screen grab of the market (which ends up as the first chart in these scalping journal posts). The trade settings on the screen grab profile default to my prior scalping approach, and have a default lot size that is 10:1 and much tighter TP and SL levels. So when I fired on that trade I was taken out in short order by my SL being hit at -6 pips.
This turned out to be fortuitous as once I had done my analysis I decided that sticking with the morning’s downward trend made more sense. The breakout below 1.4410 seemed to be real.
My panic buying was a mistake. It was a rush of blood to the head, thinking that I was missing out when I hadn’t even gotten a proper lay of the land yet. But it wasn’t a disaster, in that my previous setting limited the damage done by the mistake. Even if I hadn’t been taken out automatically, once I’d done my analysis, I knew the right thing would have been to get out of that trade ASAP.
Right out of the gate I was in the red. What made it a great trading day was that I was to make back that loss and pile on some profit for good measure.
Too often in the past I would have been like a ship that experienced a hull breach. I would have been unable to steer the boat to safer waters to bail out the water and repair the damage. Instead there would have been more mysterious explosions and I would have been sunk.
I’ve already discussed the mess-up red trade sequence so I’ll move onto the green one. I would have gone for a heavier third entry if price had made it back up to the 1.4410 resistance level. Otherwise I felt it wise to stick to another 5:1 entry as it broke below 1.4400 in case it moved higher once more. The gain from the green sequence completely gained back what I had lost from the red sequence.
Right after closing out the green sequence I was tempted to go long, purely because this was the third touch of 1.4390. As it moved back up I would have gone short if we’d seen a touch of 1.4405 again. Instead it just reached 1.4400 and then moved back down, making a new low for the session.
When priced pulled back up into the range at 1.4390 it was a classic false breakout setup and I got long. A quick ride up to near the top of the range at 1.4398 and I was out.
My only minor regret was not taking the short once 1.4405 was eventually hit at 6:56 EDT. It was getting so close to the end of the hour and I didn’t want to have to babysit a bad trade if I was wrong. Too bad; it would have been a great short, as it zipped straight back down 20 pips to the low at 1.4385.