Forex Trading Log: June 2016

I received quite a few emails recently from readers wondering if I was still trading Forex. The answer is yes! I did take a break from currency trading in May, but I have been back at it since then.

In this post, I’ll go over the trades I placed during the month of June. Let’s dive in!

Analysis

I entered this trade on a classic pin-bar setup on the daily chart. This was about a week before the UK voted to leave the European Union, when there had been rumors that “Brexit” might not happen after all. As such, I was expecting the GBP to go up following these rumors, and this massive pin bar that occurred at a key support level was the technical confirmation I was looking for.

If you look at the chart, you’ll notice the zone between 1.4000 and 1.4100 is the key support level I am talking about, where price had previously bounced up from. The fact that the pin bar occurred at such a level gave the signal more strength. Furthermore, the slow stochastics were also just crossing upward from the oversold region at that time, which was yet another point of confluence.

I went long with a price target of 1.4600, since that looked like a strong zone of resistance that the price had reached multiple times before. Normally, when trading a pin-bar setup, I place my stop loss right below the pin bar. In this case, however, the pin bar was so long, and my confidence in the strength of this signal was so high, that I decided to only place my stop loss below the opening level of the candlestick that followed. By using a tighter stop loss like this, I was able to get a much nicer risk/reward of about 1:3 than the 1:1 or so I would have gotten by placing the stop loss below the tail of the pin bar.

Two days after I opened the trade the price hit my target, nabbing me $155 in the process.

Analysis

I entered this trade on the same day as the previous one, and much for the same reasons. With rumors of Brexit not happening, I was expecting the GBP to go up against the Euro, and when a bearish pin bar formed on the daily chart of the EUR/GBP, I opened a short position.

My stop loss was placed right above the tip of the pin bar’s tail, and my target price of 0.7700 corresponded to a zone of strong support that the price had previously bounced from many times since early February. Here again, the slow stochs gave further confirmation as the K line was crossing over the D line from the top, thus indicating that the pair was picking up bearish momentum.

A few days after I opened the trade the price hit my target for a profit of about 100 bucks. Not too shabby!

Conclusion

I closed out the month of June with a total profit just north of $250. Pretty solid for only placing two trades. And on that note, I’d like to emphasize that more trading doesn’t necessarily equal more money or more success. I love trading the daily charts because they filter out a lot of the noise that you find in the lower time frames, and they make it super easy to integrate trading into my life. I only spend about 10 minutes every evening scanning through the dozen or so currency pairs that I follow, and if I don’t see anything I like (mostly just pin bars and engulfing candlesticks), I don’t trade. It’s as simple as that.

Making more money in trading isn’t about doing shitloads of trading; it’s about taking only the highest-probability opportunities that can maximize your win rate, and then scaling. Right now I’m only risking $50/trade because I don’t have a lot of capital to play with, but imagine a few years down the line I scale up to $500/trade. All of a sudden, those two or three successful trades a month add up to a lot of extra income every year. Again, quality over quantity. The key to success in trading is quality + scale.

The last thing I’d like to note is regarding my trading strategy. I’ve received a few emails recently from people wondering if I had abandoned my Heikin-Ashi strategy, since they had noticed I haven’t been incorporating it in my trades the last few months.

Well, I haven’t abandoned it per say. I’ve just been experimenting with simplifying my trading as much as possible, and I’ve found myself enjoying sticking to pure, unadulterated price action as of late. Don’t get me wrong, the Heikin-Ashi strategy is still 100% viable and I have no doubt I will use it again in the future, since it can yield some really massive profits. At this time, however, I’ve found harmony in simply trading pin bars and engulfing candlesticks on the daily charts, while always shooting for a risk/reward ratio of at least 1:1.5 or so. It keeps my trading super simple and easy, and I like that.

In any case, I hope this post satiated my Forex readers who had been asking for more trading content! Feel free to drop me a comment below, or to email me directly with any questions you might have.

Cheers!

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