Ended the week with a net loss that I'm actually happy about. It shows that my previous tactic of trading 1 micro-lot is working. I previously explained that I will be trading the smallest size whenever I'm experiencing a rough patch. Until I hit a positive R over the past five rolling trades, I am to stick with the 1 micro-lot size. I tweaked this slightly to risk $5 per trade rather than enter with a 1,000 position size. By keeping the total risk per trade static, it allows the R-multiples to be comparable.
Earlier this week, I was able to make some plays that went in my favor. After achieving a positive R-multiple by taking losses quickly and letting the winners run, I went back to my "higher" position sizes. Air quotes because it's still a reduction from the 1% risk I usually take to 0.5%. "So far so good. Followed my plan to only resume position size after completing this "micro-lot" requirement.
Unfortunately, this is where I took on a few losers that resulted in my equity graph taking another dip. This post will largely be a recap of what occurred over the course of my week.
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| EURAUD |
- I expected the latest level at 1.559 to invalidate and for price to expand further to the upside. This was essentially a play on the price invalidating.
- I went long as price was drifting lower. In my mind, this represented a lack of selling pressure. This was consistent with the directional bias that I had.
- The entry on the correction move was not optimal as I ended up pre-maturely closing this trade. This entry was a tad too early. Furthermore, my stop loss was set so that I would've been taken out only if price were to accelerate lower.
- Overall, the signal and thought process were good. Bit the loss due to emotions as price continued to trend lower after my trade.
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| AUDCAD |
- I'm beginning to realize that this level invalidation momentum play is quite difficult to execute in real time.
- I expected price to break on the upside based on how quickly the selling pressure exhausted. While price previously invalidated the upper resistance, it made a much weaker move compared to the previous. As such, I entered long.
- After analyzing this trade, I think I can separate price movements into two categories - momentum and drift. A breakout to the upside is more likely if price drifted lower. This would signal a lack of selling strength. Even if it takes me more than one attempt to enter as price is drifting against me, it still helps to preserve a high R-multiple.
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| NZDCAD |
- I don't think it was necessarily "wrong" to enter. Unlike the AUDCAD pair, the drift period was a bit clearer here.
- Price tested 0.88845 and held resisted. In the second test, it initially made a sharper move lower. However, that move died off rather quickly and "drifted." After failing to push lower, I expected buyers to accumulate and enter accordingly.
- In my opinion, this trade was simply one that didn't work out. This "drift" period was more noticeable in the 4-hour time frame as well.
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| CHFJPY |
- This play around the 1.9959 level was downright terrible. There's no other way to put it.
- Price previously breached this level, traded below it and then retested it. I decided to sell, even though my rules tell me that this pair has an upside directional bias. When price tested this level again, it slowed down. There wasn't a strong bearish reaction at all.
- For me to take a short trade, the price drift should've been going higher rather than lower. If price crossed back below this level and then tried to drift higher, then that's an indication that buyers are weak. Since this drift was lower, this is consistent with my level invalidation strategy.
Overall, I lost a bit of money this week. However, I'm not too tilted by it. Aside from the CHFJPY trade where I just completely read it wrong, I think these particular setups just didn't play out. I am happy that my own "system" of trading the micro-lot is working. Because the P&L is so insignificant, it allows me to focus on seeing how each setup I take play out.
For the rest of this month, I'll be focusing on execution quality. Specifically, I think looking at the momentum and drift moves really helps in setting the directional bias and optimizing my entries. That's my focus: execution quality.
