NZD/USD Day Trade Idea:Trailing Stop Hit

Trade Closed: 2011-08-25 6:46

Well that was quick. Just a few hours after I opened my trade, the choppy markets threw me right out! I caught a nice entry, right at the bottom of the day’s range but I wasn’t able to make a gain on this long NZD/USD trade.

NZD/USD Retracement Update

In fact, my account took a slight hit when my trailing stop was reached. You see, I was able to enter half my usual 0.5% position size at .8295 and another half at .8285. Price was moving sideways for most of the London session and I was getting pretty bored.

Once the U.S. session opened and the durable goods orders data was released, the pair jumped into action and broke above .8300. I was able to add another position at .8315 like I planned and move my stop to .8295.

At the time it seemed that the risk rally would be unstoppable since the headline figure printed a whopping 4.0% increase, way better than the expected 2.1% rise. Profits for Happy, ka-ching ka-ching!

Sadly, my happy moment didn’t last long. NZD/USD quickly retreated as traders came to their senses and realized that one good economic report isn’t enough to erase the ongoing problems in the global economy. As I mentioned in my trade idea, they’ve still have the Jackson Hole Symposium to worry about.

With that, my trailing stop at .8295 got hit and my account took a 0.16% dent. In retrospect, I probably shouldn’t have added to my position right away, especially since the markets have been extra choppy lately. Lesson learned.

How else could I have played this trade better? I know catching a decent entry price wasn’t good enough so I’d love to hear your thoughts on this trade and on my future ones as well.

Catch me through any of these accounts and I’ll try my best to reply right away!

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Happy time

Trade Idea: 2011-08-24 7:26

After my pretty good USD/CAD trade last week, I’m back with another comdoll trade idea! Are you with me on this one?

While I was looking at my charts I found a possible day trade setup on NZD/USD’s one-hour chart. For one thing, the higher lows are forming rising trendline on the chart. The support area is even lining up nicely with the 50% and 61.8% Fibs! Yay!

And if you scroll back a little further, you can also see that my “shopping area” lines up with the neckline of last week’s inverse head and shoulders pattern.

NZD/USD Retracement

Fundamentally though, I have little reason to root for the Kiwi. I’m hearing from my friends on Twitter and Facebook that risk aversion is still taking a hold of trader sentiment. Of course, it also doesn’t help the comdolls that Canada, Australia, and even New Zealand haven’t exactly been releasing positive reports this week. In fact, almost all reports out this week pretty much disappointed markets!

Still, with markets pricing in a disappointing Jackson Hole meeting this Friday, I think NZD/USD still has room to rise. My idea applies to a day trade anyway, so long-term fundamentals might not weigh as much on the pair.

In any case, I decided to enter at market (.8295) a while ago when I thought that the pair was indeed bouncing from the Fib support. I entered another 0.25% position at .8285 when it pulled back a bit, and now I’m risking 0.5% on this trade.

I put a tight stop on both positions since my trade idea is largely based on the Fib and bottom daily average range (.8270) support areas.

Lastly, I’m planning to close all positions at .8350 if the pair climbs to the level today. If not, I’ll adjust my stops and profit targets to minimize the potential impact of New Zealand’s retail sales report coming out at 10:45 pm GMT.

What do you think of my trade idea? Should I adjust my stops to minimize risk, or should I reverse my trade altogether?

I’d love to hear from you! Don’t forget to holler at me through any of these accounts:
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Happy trading, everyone!

Happy time

  • Digitalgypsy5720

    I manually closed my position just a bit ago for a small profit.  I think we calculated correctly but the market didnt want to move lol.  Until the next trade :-)

    • happypip

      Yeah our trade seemed like a good idea at the time. Oh well, it was just another crazy day in the markets. Hope to hear from you again in my next trade ideas! I can never get too much help from my friends :)

      • Digitalgypsy5720

        today before the BIG Fed news i had placed buy stops on nzdusd and audusd…SUCCESS :-)
        I’ll definitely be around for the next trade too!!

  • Craig_FX

    I am a man of my word. I am joining you on this trade! I think the bouncing of the 61.8 fib retracement makes for a good buying opportunity

    • Craig_FX

      Although risky, I set my stop at 0.8250 which was never triggered. I just closed the trade for a 10 PIP profit!

  • Digitalgypsy5720

    I guess im bias because i have a very similar idea, so i say go for it!  Good luck!!

  • Paul

    Hi, that’s really good advice you offer on these blogs. I think too that your trade idea really good, thanks for sharing… :)

  • Alpha12th

    Your strategy is same with me except that I put the STOP loss at 0.8263. Is it too far away..

    • happypip

       Nah, I think that’s fine. Gotta watch the news closely though, New Zealand’s retail sales is around the corner! Good luck! :)

  • clertor

    Hi Happy,
    I think your trade idea looks great. You could target the 100% of the retrace tho since it looks like the next resistance area. But as you said, if you move your stop you can trail it. Really like the s/l below the fib retrace.

    • happypip

      Yeah, it was great at first, but my trailing stop got hit pretty early on since the move was choppy. I probably should’ve just aimed for less. What do you think? :)

  • Clertor

    Hi Happy,
    well, i didn’t worked out as planed but I think the trade idea was good.
    Can I ask you if you calculate your position size before you enter a trade? I think (and I find myself in this situation as well) that adding is harder tahn taking off. What I mean is that if my Risk allows me to buy/sell 4 lots, that’s what I would do from the beginning of the trade and then start taking positions off the trade and locking profits. Adding is a good idea if it’s a fantastic trade and moving fast (specially if you can add on retraces of your move) but to me is a little more of an advanced technique.

    On this trade in particular I think, you could have ended with a break even trade when you move your stop up (if you didn’t add any positions).

    Anyway, those are my 2 cents. Hope you don’t mind.

    good luck on your next trade, and keep them coming since I think this is a wonderful tool for all of us to learn.
    Thanks Happy.
    Clertor

    • happypip

       Thanks a bunch, Clertor!

      You have a point about adding to my positions, especially when markets are choppy this week. Maybe it’s because I have the recency bias on that Dr. Pipslow was talking about? I thought the strategy would also work on this particular trade.

      In any case, I’ll try to read markets more carefully next time, and I’ll also try not to use the STA method on my trades. Hope to hear from you again! :)