Paper trade: Closed all CADJPY long @ 88.40 for +152 pips

CAD/JPY reached my target of 88.00 last Friday. It broke through 88.00 nicely and tested 88.50 on Tokyo open just now. I decided to book my profit in the demo account on this CAD/JPY long position entered at 86.88 and 87.87. See Figure 1 for the 3-hour chart with the entries and exits marked. Main reason for my cold feet is that there's a lot of resistance on CAD/JPY above 88.50, all the way to 90.70, from the daily chart (not shown). I couldn't tell if CAD/JPY will continue pushing upward or retrace. So I'm booking my profit now to observe the price action from the sideline. This position has turned out +40 pips more than I expected, so I'm trying not to be too greedy in this volatile time. The net profit on this paper trade amounts to +0.3% of my demo account. The yellow triangle in Figure 1 shows my exit. I risked 0.1% on the initial entry (first blue triangle). Then added 70% more to the position above a weak resistance level (second blue triangle) and moved the stop on the initial size to breakeven.

[caption id="" align="aligncenter" width="570" caption="CAD/JPY, 3-hour"][][][/caption]

Posted 21 February 2010 in forex.

Paper trade: Long CADJPY @ 86.88, Stop 86.10, Target 88.0

I entered CADJPY long at market for 86.88 just now. This is a continuation of my previous USDCAD short position. However, USDJPY is on a run upward so I'm switching to go long on the loonie with yen instead. Figure 1 shows the daily chart of CADJPY. Notice the imminent MACD bullish crossover and the already in-play stochastic upturn. I like it. My stop loss level is set at 86.10. It's the high of a previous peak on February 3, two weeks ago. My target is the round number 88 resistance. 88.0 has been an important price level for CADJPY for the past few months. So I'm setting my sight there.

[caption id="" align="aligncenter" width="570" caption="CADJPY, daily"][][][/caption]

Figure 2 shows my timing for this entry. CADJPY is noticeably meeting some resistance at 87.50. 87.50 is also the 61.8% Fibonacci level of a recent down move. This is a cause for concern on my long position as we could very well retrace here. However, the bullishness of CADJPY is apparent in Figure 2. Prices have consistently been bought for the past few days right on the short term moving average (teal line). Furthermore, the intermediate term moving average (orange line) is about to cross the long term moving average (red line) as I enter this position.

Lastly, gold price has taken a dive from 1130 to 1100. Meanwhile, crude oil price is holding the 77 support nicely. Thus, this confirm my previous view that oil has better upside than gold in the intermediate term. Which is why I've been trading the loonie these past weeks.

For this particular CADJPY trade, I have another buy order waiting above current support level to add to my long position. Let's see if CADJPY can break decisively to the upside in the next 24 hours as US and Canadian data comes out.

[caption id="" align="aligncenter" width="570" caption="CADJPY, 4-hour"][]1[/caption]

Posted 17 February 2010 in forex.

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. [caption id="" align="aligncenter" width="570" caption="USDCAD, 3-hour"][][][/caption]

Posted 15 February 2010 in forex.

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.

  1. USDCAD likes to grind out both bulls and bears at obvious levels
  2. The down move that I'm seeing is still in an early stage.
  3. My position is too small to be worthwhile if I take profit now.
  4. Analysis of my recent performance shows that I often don't ride my winners long enough.
  5. I must learn to adopt a longer term strategy now that I [can't trade as often][].

In particular, Figure 1 shows what I mean by #2.

[caption id="" align="aligncenter" width="570" caption="USDCAD, 4-hour"][][][/caption] In fact, I intend to look for opportunities to add to this position. As long as USDCAD stays below 1.0645, I'm confident (not exactly the right word though) with this down move. From this point onward, it's new territory for me as I push beyond my comfort zone. Is this an ill-fated move or a spark of insight? Let me know what you think about this extended trade. Update February 15: I closed this trade for +131 pips gain.

Posted 10 February 2010 in forex.

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