Here’s what happened last week. I executed 4 trades. Err… ok you got me. It was 5 trades actually 
And while I had voices in my head screaming “OVER TRADING!”, I took them nonetheless. So here they are:
1) 2nd Feb: Short USD/JPY at 90.67
Reason for the trade: On the higher time frames, USD/JPY was making nice lower lows and lower highs, a classic distinction for a downtrend. I didn’t put a profit target on this one (a big NO-NO), but I exited the trade a day before the release of the NFP figures. I typically don’t like to hold short-term trades over big annoucements. So check out Murphy’s Law: just as I exited, the price fell ANOTHER 150 pips in my direction! Haiz… that’s the way the way the cookie crumbles.
Nevertheless, I’ve been taught not to “worry about trades that you’ve exited.” So, didn’t lose much sleep on this one.
Result: 52 pips Profit. Here’s the chart:
(Click to enlarge)
2) 2nd Feb: Short GBP/USD at 1.5921
Reason for the trade: Can’t think of anything mysterious for this one. In a downtrend, I go short. That’s the mantra. Stopped out for this one. As if to taunt me, the charts went higher to 1.60 then plunged like a rock to 1.55.
Result: 63 pips Loss. Here’s the chart:
(Click to enlarge)
3) 2nd Feb: Short CAD/JPY at 85.47
Classic trade. Chart was trading in a nice 200 pip range after hitting a new low of 83.64 on 27th Jan. Went short near the upper border of the channel. Here’s where I SCREWED UP: I initially set a profit target of 84.41 (to net a total profit of 106 pips), but my ITCHY FINGERS closed out the trade after I was 71 pips in the money. MAJOR LEARNING LESSON: Get away from the laptop after you’ve entered the values! You will see from the chart that it did hit my profit target. Gave up 35 pips on this one… 
Result: 71 pips Profit (could have been 106 pips if I wasn’t distracted by something else!). Here’s the chart:
(Click to enlarge)
4) 2nd Feb: Short EUR/USD at 1.3919
Although the EUR/USD is in a firm downtrend, this was a WRONG TRADE because I was already in a GBP/USD trade earlier on. Let me explain. Based on readily available data, the 2 currency pairs of EUR/USD and GBP/USD have exhibited a strong 87% positive correlation over the last 1 week alone (and 88% for the last 1 year). This means that if GBP/USD moves downwards, there is a 87% chance that EUR/USD would also move in the same direction.
Now, it is a WRONG TRADE because I was ALREADY exposed to a possible loss on the GBP/USD trade, and I basically “added on” to that risk with a EUR/USD trade. BAD BOY!
Result: 53 pips Loss (and you wonder why!). I kicked myself on this one! Here’s the chart:
(Click to enlarge)
Incidentally, all 4 trades were executed within 4 hours. On hindsight, it was a little “over the top.” Got to stick to my trading rules!
Major learning lesson #1: DO NOT meddle with your trades once you’ve entered them (remember the CAD/JPY trade where I closed it early). The ONLY time you are “allowed” to do so is when you tighten your stops.
Major learning lesson #2: DO NOT take trades on pairs that exhibit very close correlations at the same time (unless you’ve either closed out the first one, or made it a risk-free trade by tightening your stop). You could either win both, or lose both. This would be gambling. Not trading.
5) 4th Feb: Short GBP/AUD at 1.8175. Trade in Progress.
This is a long-term trade. My stop is at 1.8400 and profit target is at 1.7675. Slightly more than a 2:1 risk/reward ratio. Going for 500 pips profit on this one. Very nice downtrend on the daily charts, and price is near resistance on the range channel. Plus point is the swap earned per day.
About 200 pips in the money for this one already. Here’s the chart:
(Click to enlarge)
Total pip count for the week:
1) Short USD/JPY: 52 pips profit
2) Short GBP/USD: 63 pips loss
3) Short CAD/JPY: 71 pips profit
4) Short EUR/USD: 53 pips loss
5) Short GBP/AUD: Trade in Progress
Over to you now. I’m eager to hear from you. I started this blog so that you can comment and interact with me!
Ask anything by using the comment box below. This way, everybody can read your questions and my answers, and learn from it. You can learn from everyone else too.
So… let me know your thoughts! For example:
1. What is your Biggest Takeaway from This Trade Review Today?
2. What is your Biggest Question?
GBP/AUD Trade Update on 11th Feb 2010
I exited the trade with 530 pips profit. I actually expected to hold this one for about 2 weeks, but it hit my profit target in about a week. Sweet! The plus point is the positive swap earned per day. Here’s the chart:
(Click to enlarge)
I concur with your major mistake no 2 on trading correlated pairs.
very often I realised this only after placing my trades and very often it involves the majors.
how do you select your trades ie setups , indicators used,
time frames used.
pls share your thoughts.
thank you
Hi Mario,
Nice blog. Thanks.
Just a query:
You said that the 4 trades were executed within 4 hours, but what I can see is that the USD/JPY trade started on 2 Feb and ended on 4 Feb.
In addition, the CAD/JPY trade carried through over the weekend.
Can you clarify please.
1. Is it ok to have few post open at one time with different pairs?
2. How to understand the trend with different pairs open at one time.
3.How to know it is sell or buy trend before openning our post.
Hi Mario,
Thanks for the sharing. But i just wonder what is the stratgy that you are using for each trade?
Are they using strategies taught by the Ed Ponsi or FX1?
Thanks
I think u r honest with ur trading performance, ie. u win as well as lose.
Some traders always proclaim winning all the times. I am very careful with them as I don’t believe winning all the times.
I did not carry out any trades lately as I am studying all available materials to understand the market better. I may start some paper trading soon. I traded last year, but did poorly!
Thks for ur sharing,
S Wong
Hi Mario,
I have been reading your notes/comments and it is very interesting.
I notice that the GBP/AUD has reached your traget and got better. In this situation do you think it would be wise to reverse and go long on GBP/AUD?
Tks & Rgds
Hi Pin!
I trade mostly the major pairs like EUR/USD, GBP/USD, USD/JPY, AUD/USD and USD/CAD.
I will look for charts that I can identify an obvious trend or range. I then apply trending or ranging techniques accordingly. If I can’t “see” a trend or range, I stay out.
I normally use H1 and D1 time-frames. Indicator-wise, I like the Stochastics (with default settings). I don’t believe in “fanciful” alterations.
Hi Prima!
Yup, the 4 trades were all executed within 4 hours (the first, USD/JPY was taken on 2nd Feb, 5.20am and the 4th, EUR/USD was taken on 2nd Feb, 9.30am).
The USD/JPY trade exited on 4th Feb at 5.18pm; you’re right.
The CAD/JPY trade did not carry through over the weekend. It exited on 4th Feb, 4.03pm. Perhaps you can let me know how you see it as “carried through over the weekend?”
I’ll help to clarify.
What is important to note is that the FX1 Academy MT4 platform is “synced” with Switzerland timing. This means that the timing you see on the platform is 7 hours AHEAD of the timing I actually execute in Singapore.
As an example, for the USD/JPY trade, the platform shows that I took it on 2nd Feb, 5.20am. This meant that I took the trade on 2nd Feb, 12.20pm.
Hope this helps!
Hi Santokh!
1) Yes, it is ok to have a few trades open at any one time. THE KEY THING TO REMEMBER IS YOUR RISK. Great traders DO NOT risk more than 1-5% of their capital PER TRADE.
2) Use a trendline to help you see a trend. The classic explanation is:
Uptrend: series of higher highs and higher lows.
Downtrend: series of lower highs and lower lows.
3) I think point number 2 should help to explain point number 3. Another obvious tell-tale sign of a nice trend forming is when your resistance becomes a support level for an uptrend (and vice versa for a downtrend).
Hi Gary!
The strategies I use are taught by both FX1 and Ed Ponsi. Mostly by FX1 though.
Hi Sylvester!
Thank you for following my blog!
Yes, you are on the right track. Get yourself a solid education first. Remember that a successful trader MUST have the following 3 elements:
1) Strategies
2) Money Management
3) State of mind
Do keep me posted when you start paper trading again. I’d like to be able to support you in your thinking process.
Cheers!
Hi John!
Yes, GBP/AUD has hit my target. I had a nice profit of 530 pips. Will post the updated trade review soon.
It is NOT WISE to go long now “although GBP/AUD has reversed.”
Why? 2 reasons:
1) The momentum is still a downtrend (look at the daily charts).
2) You never know when it will “reverse again and continue heading south.”
Learning point: NEVER go long in a downtrend.
[...] now. I’d love to hear from you again. We had a really great time last week discussing about last week’s trade. Everyone learned from one another’s questions. Let’s keep this [...]