216 Pips this Week -- Illustrated  

I have made 7 trades this week for a gain of 216 pips. I have gone 7 for 7. Once I exceed 200 pips I stop trading on the live account and switch over to a demo account.

Previously, my thought was to post my trades as they were occurring but I tend to focus on the trade charts while a trade is open and active. Therefore all you get is a recount.

At the open of this week, I was a little pensive as it was coming on the heels of a narrow market due to Good Friday and the Easter holiday. I was looking for an upward bias in the Eur/Jpy.

By way of explanation, I am trading only the Eur/Jpy. Interbank FX is the broker that I use. The trading platform is MetaTrader. Click on the following 15 min. chart to enlarge.



The market opened with a big push down. 45 min later (3 candles) price closed above the 62 EMA (the blue moving average). I entered my first trade of the week as it was testing the previous closing price level. The trade entry point is illustrate with a green arrow. The trade soon turned south. The next candle closed above the 62 EMA, so I stayed with the trade. Had it closed below the 62 EMA I would have considered closing the trade at a loss. Notice that at one point I was down 32 pips. My target was a few pips shy of the Pivot Point (shown as the magenta dashed line in the above chart). I really like using pivot points--including Resistance and Support Points-- for my profit targets. This currency pairs seems to respect them consistently. The 1st Trade was successful for 40 pips.

I followed the charts off and on while the family watched The Ten Commandments on DVD. A bearish divergence pattern developed. This is shown on the chart with the khaki-colored trend lines. The trend line is measured on the price chart covering three successively higher points. The divergent trend line is shown on the MACD Histogram where each associated point is progressively lower. As price had been gone up for over 200 pips in 5+ hours, I was of the opinion that a reversal was in order. So my 2nd trade was to go short once two candles had closed down after the peak.

I was almost immediately in the hole and the prospects did not look well. Yet I held on because I was convinced that a reversal was imminent. I had no stop placed and I was willing to go down 80 pips or so. I was in fact tested at -79 pips, yet I chose to hang on. The Tokyo market was about to open and I wanted to see what happened. When price pulled back five minutes or so before the Tokyo open, I entered my 3rd trade going short.

Price fell dramatically at Tokyo open and I set profit targets on both trades to a level I felt would safely be reached which was near the 62 EMA. The trades soon hit their targets. The 2nd trade resulted in a gain of +10 pips and the 3rd trade yielded +60 pips.

The next set of trades is illustrated in the following chart.


Note that Fibonacci Retracement levels have been drawn (the thistle-colored lines with labels 23.6, 38.2, 50.0, 61.8 and 78.6 Deep). Fibo levels help show where price will pause or react. Note that at the 23.6, 38.2 and 50.0 levels price held before continueing downward. Also at the 50.0% level it reacted and pulled back up beyond the 38.2% level.

The fourth trade was entered gong long when price had hit the 248 EMA (gold colored moving average) and held at the 50% retracement level. I entered the trade when a candle closed above the 248 EMA. The 4th trade hits its target of +30 pips fairly handily.

Waking up at about 11:30, I checked the charts to see what was happening. I was a little annoyed that I had not set a trade to go short when price hit the 62 EMA from the bottom. That is the sort of trade that has a high percent of success and can be done with a fairly tight stop loss (say 20-25 pips). Nevertheless, it was apparant that price would continue to go down. I entered the fifth trade on a inner candle pullback (my own term for price action within the candle where price has gone to a high or low extreme and then pulls back before returning in the same direction of the extreme). I set a stop of 27 pips (10 or so pips above the 248 EMA) and a target of 60 pips to the support level S1 (the chartreuse colored short-dashed line). The 5th trade made its target of +60 pips while I slept.

The sixth trade was a bit risky. I got up Tuesday morning to note the big drop in price overnight of over 100 pips. The 62 EMA had crossed the 248 EMA going down and my belief of a reversal being in effect from the high just before 12:00 AM GMT and also the bearish diviergence pattern noted earlier. As much as anything else though, I have noted that in my time zone PDT, price continues in the established direction during the morning hours most generally. I needed 20 pips more to make 200 pips for the week. So I went short.

Price ranged for 30 pips or so up and down. After observing the range, I entered a seventh trade going short when I was -32 pips on the sixth trade. I changed my targets to be identical on both trades. The 6th trade closed at the target of +4 pips. The 7th trade gained +32 pips.

If you ever see price ranging 30-40 pips on successive candles, you can trade short and long for a couple of cylces. Note the range and close any trades at a loss if a candle closes outside the range. This pattern happens about once a week on the EUR/JPY but there is no advance indication. You know it when you see it and you trade it then. In this instance I started out short at the bottom of the range and I watched until I could grab it at the top of the range.

Bottom line: +216 pips in 2 days of trading. The report of my trades is shown below. Note that I don't like the native reports generated by MetaTrader, so I import the data into a spread sheet so I can add better analytics (such as average gain, average loss, return for the week, etc.). Just click on the expand arrow in the upper-right corner of the Adobe widget to see the document in full. The name is x'd out but all other parts are actual.