Getting Better

Yesterday didn't start well. Basically, I traded the plan ... and got wacked on 3 separate trades; GBPCHF, GBPJPY and USDCHF.

These 3 trades cost a total of 615 pips and 2% of the account.

However - and this may seem crazy - I was as happy as one can be with such a catastrophe as I had executed a legitimate plan and managed my money sensibly.

The one lesson I would draw is that Monday is early in the trading week and, experience has shown, prone to giving these false signals.

This doesn't mean that they shouldn't be taken, but in future I am going to scale back risk to 0.25% account per trade on a Monday.

What happened next I will not quickly forget.

Feeling a bit shaken as I watched GBPJPY start to form a double top at Resistance I entered a very small (0.1% account) short position and discussed the potential for the pair to return to par (1H 800 sma) during my weekly trading session with Tom, my trading partner.


As a result of our discussions I opted to enter a further short (standard lot size) on a 5 minute break of the 5 min 200 sma and see what happened.

I entered a third short on the 1H close below the 1H 62ema.

I began scaling out at the 1H 144ema and took the second position out at 4H rising support.

I re-entered on a 5 minute close below the consolidation pattern around rising support and closed the trade completely at the 1H 800 sma.

Since Cable was mirroring GBPJPY I shorted it simultaneously but to avoid over-exposure, avoided the temptation to lever up the position and closed it out on the first touch of the 144ema, since they seemed to be 'the easiest pips'.

So what was the bottom line ? Well, these 2 trades netted 1272 pips and a shade under 4% account growth.

More importantly, I traded my plan and execution was as good as I have ever achieved, with total account risk less than 1% at entry. When viewed against the return, I am well pleased.

As a result the account is up 2% on the week. The challenge from here will be to take a step back for the rest of the week, preserve theose pips and use the time to focus on my backtesting.

Key Lessons from this trade are...

1. The power of a very small first entry in helping focus and psychological commitment to a trade.

2. The power of scaling in and out.

3. The utility of a short timeframe trigger (risk minimised), moving to a longer timeframe as momentum and profits build.

4. But perhaps most importantly, the inestimable value of a close friend and trading partner.