Day Trade Journal – Day 6- June 5,2023
First day of implementing 1% ($20) risk per day.
TRADE #1 OVERVIEW
Forex (Oanda-MT4)
PAIR: USD/CHF
LONG/SHORT: LONG
LOT SIZE: 0.2 (20,000 UNITS)
ENTRY:0.91099
EXIT: 0.91274
STOPLOSS: 0.91008
PNL: -$20.76
Trade Analysis and Insights:
Entry
I took a patient approach with this trade, since this pair is showing potential (on both 5m and 1H timeframe) to the upside and respecting both EMA 21 and EMA 200.
Exit & Stop loss
For the first trade, USD/CHF, there is a 9 pips stop loss and 18 pips take profit.
Before trading, I analyzed two factors: the EMA 21 and a prominent price zone. These were crucial in my decision-making process. The EMA 21 indicated the market trend, while I observed patterns and trends in the price action. To manage risks, I identified important price levels, including the support zone and the EMA 21. Considering all this, I aimed to make an informed trade entry and establish a stop-loss strategy.
Lot Size
20,000 units or 0.2Standard Lot or 20 micro lots.
We carefully allocated 20,000 units for this particular trade, considering the implementation of a 1% risk management strategy for each trade. By adhering to this risk management approach, we recognized the need to increase our allocation size accordingly. Furthermore, we strategically opted for this size in anticipation of a potential short-term sell-off that would promptly offset our position and have our risk manageable.
Trade #1 Result = Loss(-$20.76)
Reflection on Trade
The recent sell-off resulted in a quick implementation of our stop loss strategy, helping us limit losses and regain trading confidence for future opportunities. By cutting losses promptly, we protected our capital and demonstrated disciplined risk management. This experience highlights the importance of incorporating stop loss orders during volatile market conditions.
Improvements to be considered:
Once there was a triple top pattern occurring, we might have to adjust our stop loss to break even to control the risk even more.
TRADE #2 OVERVIEW
Forex (Oanda-MT4)
PAIR: CAD/CHF
LONG/SHORT: LONG
LOT SIZE: 0.18 (18,000 units)
ENTRY:0.67738
EXIT:0.67939
STOPLOSS:0.67634
PNL: -$21.48
Trade Analysis and Insights:
Entry
I took a somewhat aggressive approach with this trade but still waited for it to come down to my desired price level, since this pair is showing potential (on both 5m and 1H timeframe) to the upside and respecting EMA 200 and the noticeable support zone in the yellow line.
Exit & Stop loss
For the first trade, CAD/CHF, there is a 10 pips stop loss and 20 pips take profit.
Before trading, I meticulously analyzed two key factors: the Exponential Moving Average (EMA) 200 and a well-established support zone. These factors played a pivotal role in shaping my decision-making process, particularly because I employed a first entry strategy. This approach involved entering the market assertively without waiting for a second entry at a higher price. By doing so, I aimed to secure an earlier take profit, surpassing initial expectations.
Lot Size
18,000 units or 0.18 Standard Lot or 18 micro lots.
We allocated 18,000 units for this trade, taking into account a 1% risk management strategy. By following this approach, we understood the importance of adjusting our allocation size accordingly. Additionally, we chose this size strategically, anticipating a possible short-term sell-off that would quickly offset our position and maintain manageable risk.
Trade #2 Result = Loss(-$21.48)
Reflection on Trade
Just like in the first trade there was a sell-off for CHF pair. However, implementing a controlled stop loss proved beneficial in minimizing the trade’s negative impact.
Improvements to be considered:
Have an alert set up on the $10 loss mark so we can see what is happening and what is the behavior of the pair so we can have a better informed decision.
Overview of trades
Trades taken: 2 Trades
Win rate: 0% (0/2)
PnL: -$42.54
The importance of utilizing a stop loss, particularly during news-driven catalysts that trigger significant sell-offs or rallies in currency pairs within a short time frame, cannot be overstated. Implementing a stop loss serves as a valuable risk management tool, allowing traders to limit potential losses and protect their capital in volatile market conditions. By setting a predetermined exit point, traders can mitigate the adverse impact of unexpected market movements and ensure that their trading strategies remain disciplined and consistent. Ultimately, incorporating stop losses into trading plans enables traders to preserve capital, maintain emotional composure, and increase the overall probability of long-term success in the dynamic world of currency trading.
“Stop loss orders serve as vital shields, safeguarding traders from the unpredictable whirlwinds of news catalysts that can swiftly trigger sell-offs or rallies in currency pairs. They offer a prudent means to limit potential losses and maintain control over one’s trading strategy, ensuring resilience in the face of rapid market fluctuations.”