Paper trade: Long USD/CAD 25% @ 1.02988, stop 1.02080
This log is written about 18 hours after the entry. I entered long USD/CAD at the market last night for a 1/4 position size. USD/CAD took a brief run up of about 100 pips. Naturally, I moved the stop to just above breakeven to make this a risk-free trade for over the weekend.
I entered this position for the following reasons:
- Strong support at 1.0300, Fig. 1.
- Positive divergence of lower low, higher RSI since August.
- Break of short-term resistance, see Fig. 2
Note that both Figures were taken at the time of entry 18 hours ago.
Position size: 25%
Entry: 1.02988
Stop: 1.02080
Target: 1.0550, although 1.0400 might be hard to break.
Reward / Risk = 251.2 / 90.8 = 2.7 < 3. That’s why I’m only entering a 1/4 position to test the water.
USD/CAD
USD/CAD, 3-hour
Paper trade: USD/CAD long 1.07426, stopped out 1.06999 (-42.7 pips)
I went long USD/CAD this morning with 1/3 position when we bounced back up to 1.0800 and then retraced to 1.075. It was stopped out about an hour and a half later. In hindsight, this was not a good trade for one major reason. I should not have gone against the short-term trend on a weak support level even if the intermediate trend is on my back. I should have at least waited for stronger support around 1.0650.
Figure 1 is a chart of the 15-min USD/CAD with my orders marked. When USD/CAD failed to break 1.0800, a major resistance, it was a sign that the short term trend remains bearish.
At least I entered a stop and didn’t let the loss accumulate. Below are the statistics for this trade.
On another note, my stink bid placed at 1.0666 this morning seems likely to be triggered (USD/CAD is trading at 1.0679 as of this moment of writing). My stop for that is 1.0600. This is a better entry because there’s a multi-day resistance at 1.0600 and crude is testing a significant $70 resistance too. Although if I’m more conservative, I should be more patient and wait for 1.0600 instead… So I’m only entering 1/3 position for this instead of the 2/3 as in my strategy (revised since my last paper trade in USD/CAD). See Figure 2 for the support/resistance.
Update: I retracted my bid at 1.0666 because crude oil broke above $70 and USD/CAD hang on to 1.0672 or so for a few hours. If we do break it, it would only create another short-term sell-off. So there’s no point in me having an entry just 6 pips below at 1.0666. It will just get washed down when the support breaks.
Entry: 1.07426, 3000 units
Stopped out: 1.06999, 3000 units
Net: -$12.81
Time held: 1:28:00
Max. Drawdown %: -0.41%
% from Max. Gain: 0.47%
USD/CAD 15-min
USD/CAD 15-min
Paper trade: USD/CAD all out @ 1.0872 (+196.6 pips) and 1.0821 (+145.6 pips)
USD/CAD made a quick run to 1.10 and retraced back down to 1.08. Since my entry at 1.06754 almost two weeks ago, there’s been both run-down and run-up as I have noted. Although this trade turned out well with an average paper gain of 171.1 pips (see stats below), one thing that I’d definitely need to work on is not giving back the profit.
For the first half of my position, USD/CAD topped at 1.0948 and I existed at 1.0872, which is 0.71% of unrealized profit left on the table. For the second half, USD/CAD topped at 1.0992 and I exited at 1.0821, which is a dismal 1.6% left on the table. I could have doubled my gain if I can take my chips off the table at a better time.
Obviously, I still need a lot of work to do in sharpening my stops. For that, I started to keep track of my trades using a detailed spreadsheet that have custom macros to calculate my performance statistics. Some of these numbers are displayed below. I will now focus on the quality of a trade rather than just on the net outcome of a trade while I’m working on improving my trading. I’ll cover this topic another time once the spreadsheet is done. I am still tweaking the formulas and format as I record more trades in it.
Entry: 1.06754, 5000 units
Exit 1: 1.0872, 2500 units
Exit 2: 1.0821, 2500 units
Net: +196.6 pips and +145.6 pips
Time held: 159:27:00 and 256:14:00
Max. Drawdown %: 0.12% (a very good number)
% from Max. Gain: 0.71% and 1.60% (not so good numbers)
US Dollar vs. Canadian broke above resistance after FOMC and before G20
In one fell-swoop, USD/CAD gained about 200 pips in mere minutes today (Figure 1) after the FOMC meeting. With the G20 meeting going on this weekend, there’s going to be some expected volatility. However, a bright spot in this is that USD/CAD has broken above a trendline as shown in Figure 2. This is a very bullish sign in the intermediate term as I have conjectured that we’re still in a long term uptrend for USD/CAD.
While the resistance has moved from the initial point of 1.113 down to 1.086 because of the descending trendline, I will not be moving my point of ease-in for the other 50% position. We simply have too much resistance in the near-term between 1.09 and 1.11 to be adding at this point. I am happy holding a 50% position. I will only add the other 50% when the up trend is clear in both short and long terms.
Which isn’t the case for the short term as we’re obviously in a trading range between 1.0700 and 1.1100 for now as shown in Figure 1. Thus, to minimize my risk, I’m split up my stop into two and moved them up. 50% of current position below the support at 1.0872 and the rest at 1.0800.
For next week, I will consider adding 25% if we can stay above this long term trendline at 1.0860 (round up to 1.0900).
In summary, here’s an update of my plan.
Entry: 1.06754, 50% position from last week.
Stop 1: 1.0872, to book half the profit on this quick run up.
Stop 2: 1.0800, in case it turns ugly this weekend.
Target: 1.15, unchanged from Figure 2.
Update Sept 25: USD/CAD retraced to 1.0868 overnight and then continued it’s ascend to 1.0976 as of this writing. My stop 1 was triggered at 1.0872 (+197 pips). I still have half the units left. I have moved my last stop up to 1.0821 for the weekend. Hopefully it will hold and then I can look to add more next week after the G20 meeting.
USD/CAD 60-minute
USD/CAD daily
USD/CAD failing to break above a short term downtrend
Here’s a quick update on my paper trade in forex for USD/CAD. USD/CAD touched 1.0845 yesterday and dived back down. It is trading at just below 1.0690 now. I moved my stop higher to 1.0648 yesterday as USD/CAD broke above the short term trendline (Figure 1). There’s not many pips separating the price and my stop, so there’s a good chance that my stop will get gunned down.
As can be seen from Figure 1, the resistance is at 1.0770 and support is at a recent low of 1.0585. The current trend is also pointing downward.
USD/CAD 60-minute
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