Review of a Live Currency Trade

Here's a review of a currency trade that I made today...thought it might be interesting to show what I look at when I enter and exit a trade. This is a pretty typical day trade setup that I keep an eye out for whenever I'm watching the intra day trading. Generally, the 5 minute chart is the time frame that I use for shorter trades and I'll also take a peak at the 30 min, 15 min, and 1 minute charts to confirm an entry.

This trade involves the Eur/Usd Pair and it's a counter trend trade, at least as far as the 1 day and 4 hour trends are concerned. It is, however, a trend trade within the 5 minute and 15 minute time frames. Here is the chart.I have numbered the various factors that I look at when entering a trade.

1. Both of the trend signal lines are green...notice the higher trend signal line just turned green.
2. The fisher transform is in buy mode because the red line is above the blue and both red and blue lines are above the purple dotted line...indicating an uptrend.
3. The BB Width is rising and has risen above the 15 period moving average...this indicates rising volatility which confirms that a breakout will likely continue.
4. Last but not least is the Bullish & Bearish indicator at the bottom. It's pretty self explanatory...only buy when blue and sell when red.

With all of the above factors in place, I entered a long position in the pair around 1.3408 and I had a profit targe just below 1.3500 and a stop loss set at 1.3395. I derived the profit target by looking for potential resistance areas in the higher time frames.

This trade did in fact turn out to be a winner but it wasn't a huge winner. I exited a little early...should have stuck with the profit target...but an early exit is somewhat typical when I make counter trend trades. I start to get a little shaky at any sign of weakness because currency markets can reverse on a dime and take away all of your profits very quickly. Here's a chart of the exit.
As you can see, I exited short of my profit target but I did manage to book 57 pips of profit. The reason for my bailout was a spike that formed on the 5 minute chart followed by weakness in the bar after the spike. In this case, the currency pair continued to rally after a slight pullback but like I said, I tend to get nervous on the counter trend trades. In the future, I'll have to make following my predetermined price targets and stop signals more of a priority...always good to know what specific areas need improvement.

Good luck out there.

TLT