My First Trade

I have decided to focus my attention on the AUD/USD. While I research Technical Analysis I will trade using mainly fundamentals. At this stage I am developing my trading plan so I am just testing the waters and seeing how I go.


Trade Buy AUD/USD

Time: 13/04/06 1:47 GMT

Price: 0.7293

Stop Loss: 0.7270

Take Profit: 0.7315

Number of Lots: 4

Profit loss per pip: USD $40

Max potential loss: USD $920

Max Potential Gain: USD $880


I think that I have to take a serious look at my risk reward ratio. The reason that my stop loss is greater then my potential profit is that I don’t won’t my position to get stopped out by market volatility.


I invested four lots as I am very confident that AUD will appreciate given high commodity prices and the widespread thought among analysts of a 25 basis point interest rate hike next time the reserve bank meets. I think the dollar is under priced. Investing four lots was probably excessive given I only have USD $5000 in my demo account.

Below shows the 15 minute chart at the time I opened my position:
http://photos1.blogger.com/blogger/3...5minbuyAUD.jpg

I closed out my position as I don’t think it would reach my take profit before US market opened. Profit USD $320 8 pips. Parting thoughts: A fairly good entry, poor exit and poor money management. Risk level of trade high. It is all a learning experience though. Below image of closed position:
http://photos1.blogger.com/blogger/3...nBuy%20AUD.jpg

It turns out that I made the right decision to close out my trade for an 8 pip gain as you can see in the chart below I would have been stopped out at about 10:00 GMT for a total loss of $920. Dodged a bullet lesson learned. Start off trading one lot. Chart below:

http://photos1.blogger.com/blogger/3...ostSaleAUD.jpg

Hello,

You haven't posted another trade for a while? I couldn't help to notice your risk/reward ratio is backwards. I hope you haven't lost too much and thats why your not posting any more trades.I like the way your thinking but the potential reward needs to be at least the same as the max loss. Making risk reward at the most 50/50.

This will help ....if the trade moves 10 pips in your favor and comes back to your entry get out fast. Or mabe give it 3-5 below entry befor pulling it. But never let it hit your s/l. Use that as protection against lag, server failer, connect. failer ext.... And don't leave a large position heavely leveraged unatended. That kind of trade you need to baby sit.
I trade 400:1 leverage and 5-10 lot size. I can place 50% account size into the market. So if you need some help. Ask me. Befor you lose it all.


Dave

I haven’t posted a trade for a while as I post to my blog instead. I didn’t really see the point in posting to my blog and posting to FF (I am still in the game ).Wow it seems like years ago since I posted my first trades. Dave you are completely correct on all counts. At the time I posted this the concept of a trailing stop loss was foreign to me. I have come a long way since this post (still a long, long way to go). I have read Trading for a Living, Trading the Game. Now depending on volatility I use a 10-20 pip trailing stop loss or a hard stop at my break even point. When I first started to look at trading I thought the most important thing was getting my entries and exits right, now however I know the most important thing is money management. Thanks for your support Dave you are an asset to the FF community. What currency pairs/time zone do you trade? At the moment I am working on a strategy that involves using fundamental data specifically using DNT option’s data as a channel coupled with key supply/demand aspects.

Our model seems to be suggesting the possibility of a strong upwards move on AUD/USD over the coming week or two. Does this seem to make sense in terms of fundamentals?

itme,Is that a purely technical model you are using?

It is extremely hard to say. I personally will be sitting back to have a look. There is a lot of data coming out in the next couple of days as usual you can expect volatility around these times.



I think the two announcements that will have the most impact will be CAD and GDP data. In general I can't see the AUD having many good buying opportunities in the next week from a fundamental point of view. Also if there is further weakening in commodity prices that will ad more downward pressure. This is off course just my opinion and is meant for educational purposes only; it does not constitute financial advice.

Note: EST refers to Australian Eastern Standard Time
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