Day Trade Journal -Day 9- June 8, 2023
TRADE #1 OVERVIEW
Forex (Oanda-MT4)
PAIR: USD/CAD
LONG/SHORT: SHORT
LOT SIZE: 0.26
ENTRY:1.33593
EXIT:1.33397
STOPLOSS:1.333706
PNL: +$38.58
Trade Analysis and Insights:
Entry
I adopted a bold strategy for this trade, taking into account the possibility of the pair’s upward movement on both the 5-minute and 1-hour timeframes. The price movement has been following the EMA 21 and EMA 200, showing a positive trend. Furthermore, the pair is presently close to a previous support area that became resistance , which offers a favorable chance to enter the trade. This level is anticipated to draw in a substantial number of buyers, further strengthening the trade..
Exit & Stop loss
10 pips stop loss and 20 pips take profit.
Before making trades, I looked at two important things: the EMA 21 and a special price area on two different levels. The EMA 21 showed which way the market was going, and I studied how prices were moving and changing. To keep myself safe from risks, I found important price points like the support zone and EMA 21. With all of this in mind, I tried to make smart trades and set up plans to stop losses if things didn’t go well.
Lot Size
26,000 units or 0.26 Standard Lot or 26 micro lots.
We allocated 26,000 units, following a 1% risk management strategy for each trade and also have a attainable trade. To account for this approach and potential short-term rally, we adjusted our allocation size accordingly.
Trade #1 Result = Win (+$38.58)
Reflection on Trade
Having a resistance zone instead of a single resistance line makes trading easier. It allows for flexibility and accounts for minor price fluctuations. Unlike relying solely on a line, a resistance zone reduces the risk of false breakouts and provides a more realistic assessment of market dynamics. It also encourages a holistic approach to technical analysis, improving trading strategies. In summary, a resistance zone enhances trading by considering a wider range of price points and market behavior.
Improvements to be considered:
Double check if the take profit is exactly twice of the risk, this is to ensure that risk management will always have a known outcome.
TRADE #2 OVERVIEW
Forex (Oanda-MT4)
PAIR: EUR/AUD
LONG/SHORT: SHORT
LOT SIZE:0.18
ENTRY: 1.60616
EXIT: 1.60278
STOPLOSS: 1.60781
PNL: -$20.14
Trade Analysis and Insights:
Entry
I adopted an aggressive entry for this trade, and relying on zone level on both parallel channel and horizontal, since higher timeframe is showing price continuation on the downside, I pulled the trigger for this trade.
Exit & Stop loss
17 pips stop loss and 34 pips take profit.
Before making trades, I looked at two important things: Downward zone channel (yellow diagonal box) and, resistance zone (green box), and the exit is before the bottom part of the regression channel.
Lot Size
18,000 units or 0.18 Standard Lot or 18 micro lots.
We allocated 18,000 units, following a 1% risk management strategy for each trade and also have a attainable trade. To account for this approach and potential short-term rally, we adjusted our allocation size accordingly.
Trade #2 Result = Loss (-$20.14)
Reflection on Trade
Never rely on zones only, make sure that the moving averages are also in line with the trade to make sure that the pair we’re trading will have some direction and not on a consolidation phase where range market exists, and as a day trader, ranges are the one we must avoid if we want to make a profit.
Improvements to be considered:
Double check EMAs if they are trending to make sure the trade will have volatility.
Overview of trades
Trades taken: 2 Trades
Win rate: 50% (1/2)
PnL: +$18.44
Exponential Moving Averages (EMAs) play a crucial role in trading for several reasons:
- Trend identification: EMAs are effective tools for identifying and confirming market trends. By smoothing out price fluctuations and placing greater emphasis on recent price data, EMAs provide a clearer picture of the underlying trend. Traders often use the crossover of shorter-term EMAs (e.g., 20-day or 50-day) with longer-term EMAs (e.g., 100-day or 200-day) to determine trend changes and potential trading opportunities.
- Support and resistance levels: EMAs can act as dynamic support and resistance levels. When a stock or asset price approaches or bounces off an EMA, it can indicate a potential reversal or continuation of a trend. Traders often watch for price reactions near EMAs to make informed decisions on entry or exit points.
- Entry and exit signals: EMAs can generate trading signals when certain conditions are met. For example, a bullish signal may be generated when a shorter-term EMA crosses above a longer-term EMA, indicating a potential upward price movement. Conversely, a bearish signal may occur when a shorter-term EMA crosses below a longer-term EMA, suggesting a possible downtrend. These EMA crossovers are commonly used by traders to enter or exit positions.
- Volatility measurement: EMAs can help measure market volatility. By adjusting the smoothing factor based on recent price movements, EMAs are more responsive to changes in volatility compared to simple moving averages (SMAs). Traders can use this information to adapt their strategies accordingly, such as widening or narrowing stop-loss levels based on the current market conditions.
- Trade management: EMAs can assist in managing trades effectively. Traders often use EMAs as trailing stop-loss levels, adjusting them based on the EMA’s progression. This allows traders to stay in a trade as long as the trend remains intact while protecting their profits if the trend reverses.
In summary, EMAs are important in trading due to their ability to identify trends, act as support and resistance levels, generate entry and exit signals, measure volatility, and aid in trade management. Incorporating EMAs into technical analysis can provide valuable insights and help traders make more informed trading decisions.
“Success in trading is not about predicting the future with certainty, but about managing risk and adapting to changing market conditions.”