GBPUSD Daily Short Entry

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    Welcome to the inside of my trading brain. I built this forum so that I could jot down my thoughts as I take trades, as well as being able to add follow-ups for further analysis.

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pdr

Still have my trading 'L' Plates
Staff member
#1
And so it begins, the first post in the newly created forum. Hopefully this gets seen by a few people and we can jointly comment and learn from each other. Anyway, onto the post.

What I should've reminded myself of on entering this trade is that 'your odds of a successful trade are much, much better if you have confluence'.

And by confluence, I mean more than one 'thing' telling me to take the trade. But that's OK, that is what experimentation is all about at this early stage. Try everything, at least once and see what happens.

GBPUSD_2018-01-10_17-40-07.png

So the entry above was based on a counter-trend entry. I was looking at the double top and counting 7 candles back the candle that covered the high. This set up my entry, looking at a sell on a break of the low of that candle (7 back) minus 5 pips (illustrated below).

GBPUSD_Forum_1.png

This was for me a legitimate entry and worth taking a 1R risk for 2R return or 1:2 Risk:Reward as it is often called. If you're interested in the moving averages that's a 5, 34 and 60 Exponential Moving Average. I use them strictly to see the direction of the trend. What I failed to notice was that the trend was still bullish, but more on this shortly.

The indicator below price is my favourite - the Relative Strength Index (RSI) set to a 14 period and 'typical' or HLC/3. I use RSI more than I use anything else (most of the time more so than price) to gauge and predict the potential of entry and exit in my trades. Now, I also failed to pay attention to RSI here as illustrated below.

GBPUSD_Forum_2.png

RSI beats price almost always! This is a note to me and not for any other reason than as a friendly reminder to pay attention (as evidenced in the next chart). RSI held and bounced firmly to the upside and price followed strongly taking me out at my Stop Loss. I never mind losing as long as I learn something - lesson learned. Not to say I won't make that mistake again, but going against the RSI can be fatal and I will try not to do this when I can help it.

GBPUSD_Forum_3.png