Paper trade: Short AUD/JPY 50% @ 83.60, Stop 85.50

I placed this order to short AUD/JPY before going to bed last night. The order was filled overnight. I have tweaked my strategy a little and this is a first test. I think I need to start naming my strategies and giving them version number. It will make it easier to keep track in my trading log and for quick comparisons.

Here’s what I saw to make me throw my dice at this pair. Figure 1 is the daily and Figure 2 is the 3-hour chart. My reasoning are as follow:

1. AUD/JPY is testing the top of a channel, Fig. 1
2. Its RSI is pushing above 80, a level not seen since January when it was trading about 67.50.
3. USD/JPY tested 91 and headed downward.
4. AUD/USD heading up to the sky with a worsening divergence.
5. EUR/JPY (a recent +500 pips trade) failed to break 136 and showing an evident negative divergence too.
6. Short term testing of ascending support line, Fig. 2. (Should have given this more room though)

Position size: 50%, another 50% waiting to enter below 82.90

Entry: 83.60

Stop: 85.50, see Fig. 1.

Target: 77.50, bottom of channel, see Fig. 1.

Reward / Risk =610 / 190 = 3.2.

The stop is a lot wider than my previous trades because I’m finding it not worth my time to micro-manage my trades. However, notice that my total position size is adjusted accordingly to not risk more than 1% of my forex portfolio in a trade.

My focus is on the daily so it’s only natural to give it more room as I’m not a prophet and couldn’t tell when a trade would work out. This is one of the revision made to this strategy as learned from my recent lessons. A trade is only as good as what you have learned from it. Profit is only secondary.

AUD/JPY

AUD/JPY, 3-hour

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