Losing Trade: Short GBPUSD 2017-11-27

GBPUSD Chart

I have made a losing trade this morning. Before you start criticizing me for taking the trade, you have to know that I am still a beginner at this.

You see that red line on the chart. That is my trade. I have placed a sell limit order at 1.33229 with a SL of 1.3392 and 1.32882 TP. That’s a P/L ratio of ~1.5.

Why I Traded it this Way?

You can see in the highlighted region that there was a lot of selling judging by the higher price and higher volume. I was expecting the price to test 1.33250 and fall from there, judging by the background selling.

It’s also a quiet day from news point of view, so I thought that will let the technical background play out.

Instead, the price continued to move upwards. Why? I am not sure either. Probably the general sentiment of the USD falling further down.

What Did I Learn from This Trade?

  • Wait for 8 a.m GMT with my trades. Even though I have placed a sell limit order at around 7 a.m. GMT, there were a lot of new information forming on the chart in that one hour.
  • Wait for the full pattern. Even if the price reverses from where I expected it to, I should wait for the automatic rally, the upside test forming a no demand bar, and enter only at the break of that bar.
  • Beware of Mondays. I have heard many traders don’t even trade Mondays. That consider them risky as the currencies are looking for direction. There is no clear consensus on the direction for the week yet.

Current Status in my Forex Journey

I am consistently losing money at this stage. I feel I have a very good understanding of the mechanics of how this market works. Somehow I still make bad decisions. I am trading wit live money at this stage. With this one trade, I have lost $16 of my $640. My starting equity was $940. Can I make it back?

Maybe.

Action Plan to Turn my Trading Around

  • I have to be more self-disciplined and follow my strategy.
  • I have to lower my trade size to one third until I am consistently profitable.
  • Move to a new broker (probably FXCM).

So there you have it, my losing trade for today.

As a reminder, I am using quite an unorthodox method of analysis called Volume Spread Analysis (VSA). It takes into account the spread of the bar and the volume of that bar. In Forex you don’t see real volume, only tick volume. If you consider that volume is an indicator of activity, tick volume is just as acceptable as any other volume indicator.

Now I have compared FXCM’s volume indicator with tick volume, and it’s very different. The whole idea behind VSA is to look at what the bigger players are doing (e.g. banks, funds, etc.). I have a feeling that FXCM’s volume indicator doesn’t cover those market participants, but rather the horde of small traders. They are actually the targets of those big players.

How did you start your journey and how long did it take for you to be consistently profitable? What else did I miss in your opinion?

 

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