I have been doing some testing on the USDCAD Counter Trend Trade (CTT) and this pair really seems to respect the daily pivots when S3 or R3 is hit. The CTT also seems to work well with this pair when price hits yesterdays R3 or S3. This set up the following trades.
Overall Setup
Click above to enlarge
This may be a little confusing, but stay with me.
There are two trades that set up.
One setup is triggered when the pair hit R3 on 4/16. This is the stack box that is lower on the chart. A stack box is an area on the chart where I have stacked several trades in succession, usually 2-5 pips apart, all having the same profit target. In this case, I stacked 5 trades.
Another setup happens when the 4/16 R3 was hit on 4/20. This is a variation to the original CTT rules. This is the stack box that is higher on the chart. On this stack, I also entered 5 trades, but the target was the 4/20 daily pivot, plus a buffer.
In both cases, we want to see price hit the daily pivot from the day in which R3 was hit. The R3 hit could come from today’s R3 or yesterday’s R3.
Trade #1
This is the stack box that is higher on the chart. Here is a closeup of the chart on the 5 minute chart:
Click above to enlarge
As you can see, several of the trades were opened and price went against me a little. The current daily pivot served as resistance.
I wasn’t too concerned because there were only 4 positions opened. Price then came back and hit my profit target.
The total profit on the trade was +2.6% on the trade. I know, this isn’t much compared to the other trades I have been taking lately, but this is the first time that I am trading this and I wanted to take it slow.
As I test this trade more and trade it live, I will slowly start to increase the lot size to get more out of the trade. One characteristic of the USDCAD is that it doesn’t move as many pips as the other pairs I trade like the GBPCHF or the GBPJPY so I have to compensate with larger lot sizes.
Trade #2
This is the lower stack box on the overview chart.
Click above to enlarge
This trade was much more fun because price just tanked and before I knew it, the trade opened and closed.
The interesting thing about this trade is that price had previously risen very quickly in this area, but now it fell just as fast. In my backtesting, this seems to be a fairly frequent occurrence with this pair.
I made +2.8% on this trade.
Just like the previous trade, I could have traded a bigger lot size and I also could have stacked more positions since there was more room to run. That is the only are to improve on these trades that I can see right now.
Conclusion
The total gain on this account was +5.4%. Not as much as I could have made or should have made, but it was a good start to trading the CTT on a new pair. The only change that I will have to make is to trade more positions and be more aggressive.
As you can see, after the last move, S3 was hit setting up a new trade all over again. Stay tuned to see if this trade hit.
If you enjoyed this article, you might also like:
Category: 
Tags: 
