These are day trade examples from October 2 and October 5. Three trading strategies were used to generate these trades:
I trade these strategies on the one-minute chart and only in the EURUSD.
On Oct. 2 during the overlap period between London and New York (green area on chart) I only took one trade. It was a session high/low strategy trade. The price was falling aggressively back toward the low of the day made earlier in the London session. The price consolidated and then broke to the downside. A quick 2:1 trade.
After that, the price action was fairly was choppy. On Friday’s unless we are seeing really big movements I am pretty eager to start my weekend early. So There were no trades after that. Looking at the chart, I don’t see a lot of compelling trades mainly because no consolidations formed when we needed them to meet our strategy criteria (for any of the 3 strategies).
October 5 we had a beautiful tech turn trade. The price had been moving up, then it had a pretty good sized decline. Then price rallied all the way back to the high point. It had another couple tiny swings before consolidating. This also happened right near the high of the day. There was a very sharp breakout, although the actual entry occurred about three minutes before that big spike. A very quick 2:1 trade.
After this the price action gets more complex. We have some potential signals but because the consolidations are large, our stop losses end up being large which means unfavorable probabilities that our target will hit the 2:1 target (see notes on chart below).
We have a head and shoulders like structure and then a rally back to prior swing high. This sets up a possible tech turn back to the upside. But the price breaks lower out of the consolidation instead of higher. In light of the bigger potential reversal pattern playing out, this is a good short.
The price action grinds lower, making it a tough trade to hold onto. It consolidates just above the profit target. This is one time I don’t mind taking profit a bit early. The price is nearly at the target and consolidates for about about 6 minutes. By that point we could get a little pop either way, so we can take the profit we have. Usually I let my trades play out, but this is one exception where I will usually take my profit off the table.
For the second trade, I put +1 or +2 (meaning +1% or 2% to the account when risking 1% per trade). It was possible that the target may have gotten hit, just barely, but if not, we would have gotten out once the price started to rise because there was a trade signal in the other direction (not taken…price too choppy and not moving much).
If this day looks tough, don’t worry. It was a pretty tough day as the price action contracted a lot. It got choppy and we didn’t get many tight clean consolidations to trade off of.
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By Cory Mitchell, CMT. Join me on Twitter @corymitc.
Disclaimer: Nothing in this article is personal investment advice, or advice to buy or sell anything. Trading is risky and can result in substantial losses, even more than deposited if using leverage.