Overall, I felt like risk was too wide following the exact system outlined and would have preferred to anticipate entry, with tighter risk - then in turn take some profits quicker. On every single trade outlined this would have resulted in getting some of the trade off at 2R, and then been in an amazing spot to have a trailer on for the rest.
When I developed the system, I had in mind a system that would provide low risk entries (straight after fakeouts) with some form of confirmation, for a quick sharp move in the opposite direction, even if the predominant trend does continue. It seems obvious now, that as it currently stands it is more of a "reversal system". Sometimes those fakeouts do develop into reversals, USDCAD being the best example from this week, but also the EURUSD where it moved lower and consolidated then went on a second leg lower.
Changes:
(1) Aim for stops to be around 0.5ATR. This is achieved by anticipating entry. To anticipate entry need to be patient to wait for the true "fakeout" and subsequent sharp counter-trend confirmation move. Important to realise that I am not anticipating the fakeout, only entering once it's been confirmed that it was a fakeout.
(2) Use a time stop. The two trades that didn't work mucked around a lot before eventually turning away. I was already onto this, but there is a need to articulate it.
(3) Trail stop-losses by the H1 bollinger band (plus allowing for a little spike through). As these types of trades work quickly, there is no need to be slow about trailing the stop - as the two that didn't work this week showed.
(4) I also note that the divergence pattern was somewhat broken on a few of the trades (indeed the one's that worked quite well). Will still look at divergence, but by realising that I am aiming to play a quick counter-trend move, rather than a full trend reversal, it somewhat reduces the importance of divergence occurring.
The Trades:
(1) EURJPY. The first trade of the week and I followed the system to a tee on this one. The level to watch was 122.00, but it had already had a fakeout below it to 121.70, so to be super picky really wanted a fakeout below that level.
Entry: 122.70, stop 121.60, which gave a 2R target of 125.40. If it had got some legs it could have reached the target (other ones that seemed like chases easily reached their 2R target), but you'd been dreaming to expect any more than that. Took the trade off when it wasn't working for around 10 pips, so basically breakeven. Hindsight; I was spot on to take it off - hence the introduction of the time stop idea.
With some form of anticipation on entry, it would have you entering slightly under 122.00, with a 50 pip stop-loss and half taken off into 123.00. Overall, a much better trade. Then keep some on with the bollinger band trailer (which would eventually be stopped for about 1R, or even time stopped out for a bit better).
Daily and Hourly, arrows mark entry and exit:
(2) EURUSD. The zone to get short into a fakeout was 1.1460-1.1520. It had a super nice acceleration above this zone to 1.1600 which proved to be the fakeout. After the first one, I knew just based on how wide the stop-loss was supposed to be, and where the entry was that something needed to be done to get the entry and therefore risk, and ultimately risk-reward better. Two options were entering on a pull-back after the confirmation, or anticipating entry. In this case I chose anticipation. Had I chosen to enter on a pull-back the correct entry would have been around 50 pips lower, and who knows where stop-loss would be? It would be somewhat arbitrary.
Entry: 1.1560, stop 1.1620, target 1.1313. Ended up taking the trade off at 1.1399 due to upcoming news in the next 24 hours. So roughly a 3R trade.
This one sort of shows how it should work very quickly (the move from 1.1550 to 1.15), and then the continuation pattern, which never breached the upper bollinger.
Daily and hourly:
(3) AUDJPY: The zone I was watching on this one was 79.50-80.00. It got slightly below the zone and straight back over, but there was never really an acceleration to the downside. An anticipatory entry around here would have been 79.80, with a 40 pip stop-loss, which probably wouldn't have reached 2x R target, but would have been stopped on the trailer for breakeven and/or slight profit. I waited for the BB test, and with the wider stop. Entry was 80.30ish, stop 79.50ish, and eventually closed the trade out at 80.00 for -30 pips.
This is yet another one, that shows the anticipation works quite well, and another one that shows the trailing stop-loss works well as well.
Also the resulting breakdown from 80.00 is a lot more obvious after looking to fade the first test.
Daily and Hourly:
Now for trades I didn't take:
(1) USDCAD: This is a bigger picture reversal, so most certainly can't expect this every week. I felt uncomfortable chasing this one, so I looked to get it on a dip and missed it. Following my system outlined I would have entered around 1.2580-1.26, with a stop 1.2480ish. This would have met a 2R target around 1.28, and been stopped on trailer at 1.28.
It is interesting when you consider that this was a massive bigger picture reversal, yet only yielded a 2R trade - I think this backs up my idea of getting in with better risk-reward.
An anticipatory entry would have been once it got back above 1.25, so entry 1.2510ish, stop 1.2450, and would have yielded a 6R trade - much better!
Daily and Hourly:
(2) GBPUSD. Same as USDCAD I felt uncomfortable chasing this one lower. The level to watch was 1.4670. Following system, entry would have been 1.4620, with a stop above 1.4700, which ultimately would have yielded a 2R trade.
This is probably the one trade out of the ones looked at where and anticipatory entry would have had you in a lot earlier, and then stopped. That being said, the eventual acceleration through the level and failure is obvious, so you would have been stopped on the first, nailed the second, and ended net profitable by roughly 1-2R.
Daily and Hourly:
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