EURUSD Momentum Swing Trading

■ Hi and Welcome !

This marks what I anticipate to be my final and, hopefully, my most substantial contribution to Forex Factory.

Below are the most important aspects about how, what and why I trade in no particular order but before diving into the details of the content that you are about to explore, allow me to introduce myself.

I have been trading in the Forex market for over two decades, albeit with limited success. Throughout this period, I have experimented with a good amount of techniques and time frames, some automated, some manual, much like many people in this community. Today, I find myself at a moment where I realize the swift passage of time and recognize the imperative need for success. After some introspection and exhaustive research, I have arrived at this point, ready to share what I believe to be the culmination of my best efforts in trading, hoping that my beliefs will now convert into reality, I offer here some of my knowledge in the hope that you might glean valuable insights or who knows, even strategies from it.


■ Why this thread.

In my quest for a suitable thread, and I explored various of them here, I found none that were aligned with my needs and personality. I really think that my trading technique and style that I have recently adopted is very unique, you shouldn’t find anything similar in another place here. Exposing my ideas here is also a means of self-challenge, fostering accountability for my trading decisions.


■ What will you find here.

This space does not expose a trading system. Instead, I will delineate my trading insights and share my live trade entries and thoughts along with them. My results will be transparent, this allows you to evaluate my performance. You are free to interpret my entries as suggestions for your trading. Likewise, I welcome your insights, provided they align with my temporality and instrument. I am primarily a swing trader trading only EURUSD, please don’t post about intraday or other pair here, thanks.


■ The Eureka moment !

In late July of 2023 I finally discovered that momentum was the key ingredient that I was missing during my long journey. When I started back-testing it, I soon realized that it was in fact the most important piece of information that I was just not using and how blind I had been in past years. I won't pretend that I master it, as every new printed bar in the chart is unique in time and character, I just understand its language better.


■ Logically moving from a technical analyst to a momentum analyst.

From now on, I emphasize the significance of price action and momentum over any other technical indicator.
The years drawing trend lines, supports and resistances are definitively behind me, Momentum is my new religion.
Fundamental events undoubtedly drive market movements, yet their impact is ultimately reflected in price action and strength. Technical analysis, with its inherent failures, contrasts with the reliability of observing price movements over time. I advocate for giving the price adequate time to reveal its trajectory and following its lead, Once you know how to do that, you realize, in fact, that you need nothing else.


■ Momentum.

Detecting momentum shifts is pivotal in my trading today. I define momentum as the result of three components, Price Action, Strength and Follow Through. While identifying momentum in a robust trend is straightforward, it becomes difficult during pauses, when the market seems to hesitate between a continuation or a reversal. I have developed techniques based on extensive historical backtests to discern these shifts but I must acknowledge that their effectiveness may vary over time and that they are sometimes difficult to apply.


■ What do I trade, how and where.

I exclusively trade the EURUSD pair due to its high trading volume and the alignment of EU and US markets with my daily schedule in Central Europe. While the specifics of my trading rules remain private, I use publicly available indicators to gauge momentum. Additionally, I also use the SMA 100 as a direction reminder tool and even if I sometimes look at the daily and weekly charts to listen to what they have to say, I gauge the momentum and execute my trades exclusively on the 4-hour chart.

Regarding my trade execution, I have conceptualized a trade management approach that I call "Win or Die" wherein every trade either reaches the stop loss region or emerges as a winner. This philosophy eliminates setting a break-even point after a certain profit margin, giving trades all available space until a clear change in direction or a stop loss situation appears. While losing trades should tend to be brief, winning trades may span from 2 weeks to 1 month. To the contrary of the Stop Loss which is well defined 30 pips away from entry, I don't use predefined targets, it is momentum changing direction in a clear way that defines my take profit point.


■ Risk.

It goes without saying that understanding risk is paramount in trading.
When most traders adhere to the 2% risk rule, I advocate for a more personalized approach, considering individual circumstances and trading goals. My trades entail a risk ranging from 10% to 20% over 30 pips on a closing basis but I plan to progressively reduce this risk mainly to maintain a balance between growth and stability of equity.


■ Transparency.

To ensure transparency, a live explorer is attached to the thread, verifying the authenticity of my trades. This transparency underscores my commitment to practice what I preach. Only trades after August 23 follow the approach discussed here.


■ Quality.

In this thread, the emphasis lies on the quality rather than the quantity. In addition to continuously gauging the momentum, I meticulously focus on entry and exit points, the pivotal moments in any trade, while showing patience to allow trades sufficient time to unfold. This approach acknowledges the inevitability of significant retracements before the substantial or final movement occur.


■ Professionalism.

Over time, my objective is to cultivate a disciplined focus on market momentum, ensuring constant mental alignment with the prevailing market sentiment throughout the trading day. This approach should allow me to take timely and well-considered actions in response to both anticipated or unforeseen market shifts. Regardless of the outcome, momentum synchronized trading under any circumstance, will undoubtedly boost my transition from an amateur trader into a professional one and above all, a profitable one.


■ Final Words.

Your contributions, inquiries, and constructive remarks are welcomed here. However, discussions related to scalping or any other non fitting trading style will not find relevance in this thread. My intention is not to prove myself to others but to remain accountable to my own standards. I print my thoughts and my trade decisions here for me to keep a trace of when and why I did what, in the spirit of constant and continuous improvement. I hope that you can find value in it, much as I have found in other threads on Forex Factory in the past ■

My first 4 trades using this approach.

In the chart below in yellow are the bars that I identify as being of significant momentum. They were partially responsible of my entries along with some other confirmation data.

During the trends you can see those same bars appearing again and again, this is momentun showing its face and confirming the direction of the trend.

Trade #3 was tricky, there was a momentum bar which initiated the trade and I went into it for a loss.
This one is of those that are sometimes difficult to identify but anyway, losing trades are part of the game.
In this particular situation, the game was to know if previous trend/trade somehow developped fully, in other words, if the bearish momentum was exhausted and if the new positive momentum was of corrective or revertive nature.

After entering trade #3, a big momentum bearish bar put me in stop loss territory and hopefully that bar was so big that I just couldn't ignore it, so I took my loss there and entered trade #4 which is still open and running.

Trade #4 is going well so far. Current trend is strongly bearish with a lot of dark and big bars against a few white and smaller bars, another way of witnessing momentum. I guess that the trade will last at least up to the end of this week and month. A new month could be the excuse for a retracement so I will be watching what is the amount of momentum at that moment.

Nothing magical here, going with the herd, cutting losses short and letting profits run... read that somewhere ?

Hi!
#2 trade was closed when You opened #3? If not, where and when did You closed it?
Wish You succes!

Hi, usually I keep a trade until I get a contrarian signal, so yes, trade #2 was closed when I opened #3

Thanks!

Shutdown Madness, an update on current trade #4.

Momentum started to turn positive since Sept. 28 in the morning, it was confirmed by sustained and sudden "unusual" strength to the point that it was a bit overbought. I was uncomfortable with this sudden change as for me the current downward trend was not done yet so I went to the news section and got the why for this move.

I don't know fully the impact or importance of it but as I saw the market acting "irrationally" and knowing that the markets can be irrational longer than we are solvent, I decided to close the trade taking the remaining profits and observe the price action. Almost at the time I did it, the market calmed down and looked like coming back to normal mode so I entered my short trade again 30 minutes later.

This was a break of my "Win or Die" rule but there were attenuating circumstances and now that things seem back to normal my trade was reestablished as if I never had been out of it and I still consider it the same trade. I'm aware that if the shutdown is resolved or not during the weekend, there could be a gap in either direction at market open but staying out would have been a definitive break of that rule so the trade is there for the best or the worst.

■ Good start for the month.

Hopefully, and as I expected, the price reversed course and made today a new month low. My feeling of "unusual" in my previous post was correct and the upward move ended being of corrective nature.

Today, two strong H4 bear candles were drawn slowly but relentlessly during EU and US sessions, and when both agree on selling, it's again a sign of bear strength. It looks like that the final H4 bar of the day will add some additional pips to the trade.

I don't know where this new low will settle, as there is almost no bulls in the place, at least today, but this new low is the initiating process for a corrective or reversible action at some point in the future. Nothing to do until that happens except continue to gauge the strength of the momentum in whatever direction and act accordingly.

■ Trade #4 daily update.

Good habits make good traders so I will try to have a new routine of writing down here daily about how I feel the market, how I perceive the actual momentum and current running trades, let's start...

Very little to say for this day, only 2 positive 4-hour candles over 6, which marks another bearish day.
The only notable event was the US JOLTS Job openings which was positive for the dollar but not enough to print a significant low on a closing basis.

At the time of writing, the pair prints 1.0465, the momentum has recovered a bit from yesterday's strong pressure but it's still weak, signaling only a pause from yesterday. No sign yet to make me close trade #4 which prints +130 pips and 35% profit.

"Life is made of ever so many partings welded together." - Charles Dickens.

■ Finally, trade #4 came to an end.

Yesterday weakness did not manage to print a new significant low, this morning that sentiment remains and the last closed candle trying again to make a new low and then suddenly turning positive and closing near its highs is enough for me to acknowledge the change in sentiment and close my short.

A good profitable trade with a profit of 52% which represents a risk reward ratio of 3,47 (using 15% as mean SL) which is not bad.

Trade #5 is in and a positive momentum seems to be building slowly, I only need now some follow through to confirm my entry.

Attached Image (click to enlarge)

■ Trade #5 daily update.

Today was the first trading day for this new trade.
The bar close of this morning (7h) was the trigger to close my previous short and start this new long trade as explained in my previous post.

My entry price was 1.0486, with 1.3 lots over 30 pips, my minimum risk is 9.76% of account balance.

It got good follow-through on the next bar which printed an advance of 40 pips putting the trade in positive territory very quickly. This is the kind of follow-through that I like to see after any entry.

The 2 last bars of the day got some bearish pressure but both resisted well. Their bodies are by far smaller than the follow-through bar which means that overall the momentum is now positive as was the day.

A future close above the follow-through bar close would put us in up-trend mode which could be the beginning of a
corrective or reversive movement to the upside...


"The only thing we have to fear is fear itself." -Franklin D. Roosevelt

Keep going and explaining! Explaining helps You, too, to consider or re consider trades. The way we progress...

Even if that could happen because there are always extraordinary curcumstances, in the normal course of things, I should not reconsider a trade, meaning that if it's there, I had good reasons to enter it, then it can only "Win or Die".

My daily updates where I write down my thoughts are there more to keep a trace of how I see the market at that moment and eventually why I changed my mind if I did so, regarding a shift in sentiment. I'm learning to be "in sync" with the market and try to go with it.

■ Trade #5 daily update.

Despite not being very strong, the last 3 bars of the day were positive and as I was expecting in my previous update, it went through the previous high of yesterday making a new high. That being positive, it's not yet significant until we don't move above the prevailing down trend previous high at 1.0609.

This is to say that the momentum is actually positive and I'm with it while being cautious at the same time, tomorrow NFP numbers could be a catalyst for much larger moves and certainly also explain why the market is so slow today.

Still, this trade in its young age is already printing some profits, nothing to care about for now because these could be gone tomorrow with the blink of an eye, but still, it did the job, at least for now, by giving me some margin in the event the market goes against me tomorrow.

"Well done is better than well said." -Benjamin Franklin

■ Trade #5 daily update.

Today I got the perfect illustration of the break even stop loss fallacy.
Being 70+ pips in profit, the NFP pulled back the price into my entry point to only reverse again minutes later and climbing more. The trade is now showing +99 pips with 28% profit.

I really thought that my trade was done but I was respecting my Win or Die rule so I was in peace as it's OK to have losses.

Momentum is definitely to the upside with this big engulfing candle and so am I.
Previous high at 1.0609 is still there but I think it would have been too much for today so maybe next week.


"It is during our darkest moments that we must focus to see the light." -Aristotle

I didn't realize that your were posting again - woot!


Kudos on hanging in there with your plan my friend...

■ Trade #5 daily update.

As if one war was not enough, here comes a second. It looks like our little planet is not big enough to shelter everyone.

Nothing motivating and significant to say about current trade as today's moves were driven only by fear and uncertainty.
Tomorrow is another day, maybe a better day, I really wish it being more peaceful for everyone.

"Progress has no significance if one child is suffering somewhere." -Unknown

You are, really disciplined! Now the sentiment seems to be on Your side, too!

■ Trade #5 daily update.

H4 Momentum remains positive and previous high at 1.0609 was taken which translates in a possible H4 trend reversal.
Daily momentum is also overall positive but I can't yet call it strong.

All this makes me remain positive but some concern is raising as we have a very similar situation as in late August as pointed by the red arrows.

Attached Image (click to enlarge)

I will watch if price remains above the SMA 100 in coming bars which would be a sign of more upside. I could close my trade and enter short on the contrary and on sustained change in momentum.

To summarize, I'm now cautiously bullish and would like to see more follow through after eventually some restrained pullback.

“It is hard to fail but it is worse never to have tried to succeed.” -Theodore Roosevelt

Let the market tell You. Don t serch for reasons to close a trade! It can be next a ranging period , too. But that any time can happen. So,
Let the market tell You, when to close it! You are disciplined, if You are 100% that! Be well!

■ Trade #5 daily update.

Good PPI numbers of today put some downside pressure but it all was absorbed, meaning that there is accumulation which is bullish.
The same on a second tentative before FOMC minutes that is now also being absorbed and it looks like we are closing the day positive.
The SMA 100 is acting well as support rejecting all bearish attacks and candles are systematically closing above it.

Overall momentum is there but it's very thin. Tomorrow's inflation numbers will give I think a definitive direction for the rest of the week.

Trading the H4 close gives the advantage of eliminating the intrabar noise, on every close the momentum was back to slightly positive after having been a bit negative and gave me no reason to turn bearish.

The trade is now seven days old and has been accumulating profit day after day but tomorrow is another day and things could turn 180°
I just need to ensure that whatever the direction the momentum gets, I'm just behind it.

Good momentum swing on USD/CHF, daily chart. Momentum killer.