We started Aug with some excited movement for myself:
First of all, I have decided to add 2 more free trade alerts for my free members.
One is a daily strategy for people who only want to trade once a day with a very passive and relax style.
I used to use this strategy with a very good result, but i was a pure technical trader and sometimes just suffered many losses because i was completely unawares of the market sentiment, news and the fundamental side of the economy.
I started implanting the fundamental & sentiment analysis into my daily trade with the same technical strategy and it has been providing a very good result so far.
On top of that, i also tweaked some money management style to take the best opportunity in this strategy.
So now i’m very excited to trade them myself and also share with my members.
Of course, all my alerts are really only educational purposes and at the end of the day, you have to really develop your own strategy and risk management style to fit who you are.
My #1 criteria in deciding to take a trade or not is still risk management and will always be risk management.
Second strategy i added in for free members is London Box. As mentioned in my FREE STRATEGIES page, i developed it with the help of my mentor Walter Peters, and I added few tweaks with 10 years of backtesting because it is a mechanical system with some fundamental personality in these particular 2 currencies.
I only trade this currency pair for this strategy and it has been working very well, however, I personally don’t trade them anymore because the drawdown is too large for my styled - up to 25%.
The average return for the past 10 years is 16% and you will have years of no return at Break even and years of 50% plus return.
I also changed a bit of my trading style in my intraday trade, and i’m just very excited overall to learn more about myself again.
So Monday I took a EUR/GBP LONG trade due to sentiment play and it has worked out.
Unfortunately, today my EUR/AUD trade did not work out and it’s many because of my own risk management style.
The thing about trading the news or trading for any catalyst is that you have to know this will be the most violative event for the currencies.
Not only no one can predict the result, but no one can predict the market reaction.
Market can always buy the rumour and sell the fact, market can also buy the rumour and keep buying after the fact, or market can not buy the rumour but but the fact, or market can simply do nothing…etc
Because of that, it is always a good practice to either scalp whatever you can for this kind of event, of course, you limit yourself to small profit and get out when the fundamental is still in your side. Personally i don’t scalp that often because I just don’t like to get out of a trade when i’m winning without any proper reason.
Second style is to use a larger stop loss.
Why? Because you will never know how violate the event is, and remember you always have sellers and buyers who are equally interested to sell and buy for this event. You always have different style of traders with different goals.
So your normal daily range will not be sufficient to protect yourself - which was exactly what had happened to my EUR/AUD trade.
Sure, AUD actually has been bought after the rate cut - which a lot of traders might panic and find it’s illogic.
However, it’s very logic because a lot of traders are always in favour of buying AUD.
Regardless of the new 1.5% rate, AUD is still very high yield in comparison with other currencies, the fundamental side of the country is still very attractive, and the carry trade position with Japanese yen will also always be there for now.
So If you look at their prospective, you’d understand that whenever AUD drops, it just becomes more attractive for them to buy.
And precisely because of that, you should always protect yourself with a larger stop loss in this kind of event.
Anyway, I guessed I should have known, but the thing is that you’d always learn in the market; not the textbook.
And every lesson you learned with money (loss) will always be a great lesson to remember.
I have paid my $1200 tuition today, and I will keep this lesson in mind.
The thing i’m really proud is still my risk exposure, as i have exited my GBP/USD trade prior to the event, and also tighten my SL for EUR/GBP trade because i don’t want to expose too much on the same currency - euro.
And it turned out that EURO did changed the direction and we have offset some of our losses with 1 wins in EUR/GBP and a Break even in GBP/USD which at this moment has gone against us in more than 150 pips if we had not exited it.
Good call Enho 😃