rks's thoughts, processes and trades (focused mainly on GU and EU)

I would like to start of by declaring this as my trading journal, where I can insert my way of thinking about the Forex market with GBPUSD and EURUSD being of the main focus. I have been trading for 4 years.

Why this thread/journal?
A colleague of mine as well as a 10's of other people I have met; have always had a curious interest in seeing how I trade and were always curious to understand how I sustain myself. A lot of them want me to be their mentor. Frankly, I don't have the time for helping each and every one of them. I rather just trade .

But, for them, and anyone else who gets curious about my nature of trading, I have this journal written which describe the way I think, process the information given by the market, and how I trade.

Why ForexFactory?
I do have my own website where I will keep putting up similar information, however, my objective to post my trades and thoughts here is so I can have them critiqued and discussed by other traders. Please constructive posts only.

How do I trade?
I use a combination of managing my emotions, money management oh..and yea my method as well. My method consists of: Support and Resistance, Price Action, Chart-patterns, Candlestick Analysis, Trend-lines, Volatility Bands and most importantly (my gut feeling or intuition, honed after days and days of screen-time)

If you were wondering what rks on the title means? It is actually a very complicated algorithm, constructed from an ancient language. If we were to possibly try to decode the three letters, it would possibly reveal so much information that...err..uhm..okay, they are just my name initials.

enjoy.

P.S. These are not going to be trade signals, but more my thoughts that point you towards a direction of how I see things. It is up to you to decide how to take that.

Ok, so this is what was happening in my charts for the EU. I took this trade at the break of the resistance line highlighted in red, also pointed at by the red arrow. I hadn't had a time to update you all in real time, as that would have been better than showing you guys a chart in hindsight. I'll try to do that next time.


Trade Analysis (4h chart) -

http://rksinvesting.com/blog/wp-cont...03-300x130.jpg


After breaking my upper trendline/channel, I didn't just jump in the trade as I knew the first resistance isn't too far away.


I am glad I didn't as well, because price stopped right there, as well retraced a bit. Luckily I was watching all this happen in real time. My trade entry then became the high of the previous candle (aka the black one) as if it breaks that, it would have no major resistance other than the next resistance line. As you can see the rise continued till it closed near the next resistance line.


Note: When you watch a break of a particular scalp line or support/resistance line pay close attention to the momentum of the market. In other words, pay close attention to the rate at which the price is changing(increasing or decreasing). Don't just enter just because it broke a line, we need to figure out if the move is actually legit. If anyone needs more clarification on trading momentum with scalp/support/resistance lines, then I would be happy to explain.

Reasons and process for this trade:


- (Illustrated by the green arrow on chart above) Initial upper trend-line break to tell me that the downtrend of EU has ended for a bit.
- (Red arrow) Break of the high with momentum and the break of the resistance close to the red arrow.


Also for the longterm:

http://rksinvesting.com/blog/wp-cont...12-300x130.jpg


Overall Sentiment for EU is BEARISH for the next few candles at least, unless we see a break and close of the MAJOR upper trend-line, but till then, expect a retracement from that same trend-line.


happy trading!

http://rksinvesting.com/blog/wp-cont...64-300x133.jpg


My thoughts for the GU are explained on the chart. As for the technical details:


LONG
Break of 1.5388, in either a momentum or candle close form.
Aggressive SL – 1.5330
Conservative SL – 1.5310
TP – 1.5460-1.5470, however this can vary depending on momentum.
If we do go long though, we could possibly see it go up to 1.5550 area this week.

SHORT
Break of trendline and reversal patterns to confirm reversal
Aggressive SL – 1.5380
Conservative SL – 1.5400, nice round number.
TP – 1.5300-1.5310, granted not the greatest RR(Risk reward), but my usual RR’s are very variable. Some times they are 1:1 but mostly it is x:y where x and y are determined by many variables happening in real-time.


happy trading!

Treat the number's above as guidelines as your x:y should always adapt to the market.

It is NEVER fixed.

I don't like the theory at all of having definite amount of take profit or a definite amount of stop loss as this is absurd to me!

Why would you want to close a winning trade? simply let it continue but have a trailing stop...because chances are the trade that is making you money will make more money.

This goes for your stop loss as well. You can't set a '20 pip stop loss' no! It has to be variable under market conditions, support/resistance, high/lows!

Use the x:y formula for your risk reward.

In which you will always milk the market for the most money. As well as stop your losses early ASAP.