Paper trade: stopped out of AUD/JPY 83.59/84.90 (-130 pips) and EUR/JPY 136.73/137.50 (-77 pips)

By Paul | Published: October 22, 2009

I shorted AUD/JPY on the 20th and then shorted EUR/JPY on the 21st.  Both positions were stopped out before Tokyo opened tonight.  I didn’t write an opening post for EUR/JPY because it’s the same as usual, long term setup, short term timing.  I’ll briefly go over the two trades here and what I have learned in hindsight.

First let’s talk about the AUD/JPY trade.  I wrote about the entry here.  Figure 1 shows the daily chart.  AUD/JPY has managed to edge out of its channel with an obvious negative divergence on the RSI.  However, it feels as though it’s going to turn any time soon as seen in Fig. 2.  I’m not going to try again though because I need to learn to trade what I see and what I feel.  I shouldn’t even consider to short it until its below the short term channel.

For this AUD/JPY short entry, I entered too early because I drew my channel too tight.  If you compare Fig. 2 in this post with Fig. 2 from the entry post, you’ll see that the supporting line is lower here.  The previous line didn’t enclose everything as it should.

For my EUR/JPY trade, I tried to short the top again…. When will I learn?  Fig. 3 shows the setup on the daily.  EUR/JPY is obviously testing a strong resistance.  So far so good.  Fig. 4 shows the 3-hour chart for my entry (yellow inverted triangle to the right, the last red dot is the exit).  This is where I failed.  EUR/JPY was testing 137 and the top of the channel before I entered.  Then once I saw that EUR/JPY failed to touch 137 again for a few bars, I entered.

Shorting a new top is ill-advised because the price can consolidate upward along with the channel as shown in Fig. 4.  You’ll be fighting a losing battle as the momentum is working against you.  In any case, the lesson from both of these trades is that I need to learn to be more patient with my entry.

The loss for AUD/JPY is -130 pips for -$29.82 and the loss for EUR/JPY is -77 pips for -$26.46.  At least my position size was halved because I knew these are risky trades.

Note: All the charts were taken just now after the exit.

AUD/JPY

AUD/JPY

AUD/JPY, 3-hour

AUD/JPY, 3-hour

EUR/JPY

EUR/JPY

EUR/JPY, 3-hour

EUR/JPY, 3-hour

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  2. Paper trade: Long EUR/USD 50% @ 1.49212, stopped out @ 1.4875 (-46.2 pips)
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This entry was posted in Aussie, Kiwi, Loonie, European Crosses and tagged AUD, entry, EUR, exit, JPY, paper trade. Bookmark the permalink. Post a comment or leave a trackback: Trackback URL.

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