April 20, 2010 - GBPJPY CT Trade

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Here is a variation of the Counter Trend Trade that I have been testing.  In my testing, when price hits the S3 or R3 of the previous day, it is still a valid signal and has a good chance of hitting the most recent daily pivot and even the daily pivot of the R3/S3 that was hit.

Here is the 1 hour chart of the trade:

Click above to enlarge

As you can see, price gapped down on Monday and hit the S3 level of the previous Friday (red line).  I stacked orders just above the gap in case the gap acted like a resistance level.

This lead to slightly fewer positions, but was a little safer in my opinion.  As you can see, price rebounded sharply, then went through the profit target.

The problem was that I exited the trade early, before it got to the profit target.  I figured that I had a majority of the profit available, so it would be better to take it.

In hindsight, if I had waited a little longer, I would have been able to capture the full profit.  This is always a constant issue in trading, to take the profit or not.  With these trades, taking the profit is even more of a dilemma because of the number of open positions that are at risk.

Click above to enlarge

Here is a close up on the 5 minute chart.  As you can see, my exit was premature.  After a very minor retracement, price hit the target.

This resulted in a +7.0% gain on the account. Another thing to note is that price did end up hitting the Friday daily pivot also, which would have resulted in twice the profit, had I taken the trade.

The only things that I would do differently is I would have held the position longer and put in another set of orders that the Friday daily pivot.  Overall, I am happy with the results.

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