Closed USDCAD short @ 1.06525, breakeven

It seem that USDCAD isn’t about to die just yet. My USDCAD short got stopped out at breakeven this morning. In fact, the pair is still struggling around the descending resistance line as shown in Figure 1. It made a higher low so I won’t be surprised if it cracks higher.

USDCAD, 4-hour

The reason why I took this trade was that the opportunity seemed too good to pass on based on my analysis at the time. I always keep an eye on the market even when I’m not trading. Although the basic setup remains intact, the opportunity isn’t so fantastic that I couldn’t say no anymore.

Anyway, I shouldn’t be wasting time managing a minuscule trade. Back to staring at codes.

Short USDCAD @ 1.0654, Stop 1.077

This is my first real forex trade after a year minus one day of studying the market and paper trading.

Shorted USDCAD based on the following intermarket observations:

1. Yesterday’s equities sell-off held around S&P at 1050
2. Overnight Asian market seem orderly, not every market followed through, but most did
3. European markets down move were slow overnight until US open
4. But perhaps most importantly, EUR/USD made a higher low with an increasing COT

Basically, as much as the sell-off tries to scare off people, the markets don’t seem to be moving in unison. So it would seem this move (in equities, thus inverse USD) is still a bear trap in an intermediate term bull rally.

Plus this daily chart, Figure 1, for picking USDCAD specifically.

USDCAD daily chart

And this 4-hour chart for trade execution.

USDCAD 4-hour

Size of trade is 1000 unit. Risking about 0.05% of capital with a hard stop at 1.077. Anything above 1.070 would put me on alert though.

Coincidentally, I first got into the forex market by studying the loonie. Let’s see how this first trade performs.

Paper trade: Stopped USDCAD short @ 1.0540 for +131 pips

Finally a profitable trade in my USDCAD short after being stopped out a few times. My decision last week to hold this for longer after USDCAD touched my target paid off. I moved my stop closer last Thursday evening and the order got filled on Friday. However, as I type this on the following Monday, USDCAD is trading even lower at 1.0478. It looks as though my original target of 1.0415 is in the cards.

Even though this is a profitable trade with a 0.17% gain in my demo account, there is one major flaw with this short USDCAD play. I was not able to squeeze more out of this profitable move.

As I’ve said, this short took a few tries. In fact, if we consider all the entires and exits of this play. My stopped out losses totaled 0.29% and my single win here is merely 0.17%. So I’m actually at a net loss of 0.12% from all these work.

My win/loss rate is about 40% based on my review of recent forex trades. I was able to edge out more than 10% profit in four months because when I am wrong, I take small steps. But when I’m right, I pile into a position.

Ever since my trading environment has changed, I’ve been trying to trade a longer timeframe. This USDCAD short is my first attempt on a new strategy. Evidently, I will need to re-think and re-learn what I’ve become accustomed to in the past few months.

One of the necessary trait of a successful trader is to be able to adapt. Markets change. Traders need to evolve with the markets or they will become obsolete. This will be a good test of myself to see if I can re-invent myself to adapt to a changing trading environment.

USDCAD, 3-hour

USDCAD short target hit @ 1.0581, trying something new–to hold for longer

USDCAD comes to a halt at 1.0581 today. My original target was 1.05761. A mere 5 pips difference. This position is now +79 pips on paper. I moved my stop to breakeven last night. Normally, I would have covered most, if not all, of the position at this point. But I’ll hold onto the full amount this time. For now. Reasons are as follow.

Paper trade: Short USDCAD @ 1.0671, Stop 1.0756, Target 1.05761

Perhaps third times’ the charm? I tried to short USDCAD twice last week already. Both times I’ve been stopped out for a total of -0.2% of account loss. My intermediate term analysis remains the same as before. So I won’t repeat myself here.

Entry signal for this particular short is shown in Figure 1. I’m just using the 4-hour chart as I have a well defined (recent top) stop this time. I compensate with a smaller position size to limit my risk to 0.1%.

Reward / Risk = (1.05761 – 1.0671) / (1.0671 – 1.0756) = 1.11

USD/CAD, 4-hour