Analyse my trade (GBPJPY Short) - was my logic good? | Forex Factory

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Analyse my trade (GBPJPY Short) - was my logic good?

  • #1
  • First Post: Mar 9, 2016 8:53am Mar 9, 2016 8:53am
My current approach to trading involves initially identifying a trend in market on a higher (D1 and H4) timeframe, and then dropping down to the H1 chart to find an entry point for a trade in the direction of the main trend...
Yesterday (at 19 : 21 : 00 GMT) I entered a short order on the GBPJPY pair for the following reasons:

1. The market was trending downwards on the D1 and H1 charts, as you can see below
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2. On the hourly chart, we can observe that there was a shorter term up trend (retracement) between the 1st and 4th of March.
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However, this was followed by a double top, which may result in a continuation of the overall down trend.

3. On the daily chart, a Doji (followed by a Marubozo) formed after the retracement. This is also a sign that the initial trend may resume.

  1. I sold into the market at the 160.111 level.
  2. My target profit is at 155.784
  3. My stoploss is at 160.819


What are your thoughts on this trade? Can anyone offer some constructive criticism?

Thanks

  • #2
  • Mar 9, 2016 8:58am Mar 9, 2016 8:58am
Quoting Ponzi Jr
My current approach to trading involves initially identifying a trend in market on a higher (D1 and H4) timeframe, and then dropping down to the H1 chart to find an entry point for a trade in the direction of the main trend... Yesterday (at 19 : 21 : 00 GMT) I entered a short order on the GBPJPY pair for the following reasons: 1. The market was trending downwards on the D1 and H1 charts, as you can see here: 8537685377 2. On the hourly chart, we can observe that there was a shorter term up trend (retracement) between the 1st and 4th of March. 85378...
No charts. No Attachments.
  • #3
  • Mar 9, 2016 9:50am Mar 9, 2016 9:50am
you see a downmove possibly....good eye....I gotta go look up marubozo....be right back....
  • #4
  • Mar 9, 2016 10:15am Mar 9, 2016 10:15am
Quoting LITEchild
{quote} No charts. No Attachments.
Hopefully it's now sorted.

Quoting Gbp/jpy
you see a downmove possibly....good eye....I gotta go look up marubozo....be right back....
Thanks. And I meant Marubozu
  • #5
  • Mar 9, 2016 11:25am Mar 9, 2016 11:25am
I like your approach. Interesting. Currently GBP / JPY D1 downward. For H4 can distinguish a rising trend.
  • #6
  • Mar 9, 2016 12:02pm Mar 9, 2016 12:02pm
i'm testing teb63's 3rsi 5&12 ema method which also uses d1,h4 and h1 for entry. yen pairs were out of spec today for this method, although usdsgd and gbpaud produced signals with entries on m15
  • #7
  • Mar 9, 2016 5:44pm Mar 9, 2016 5:44pm
Thanks for the responses, but can anyone please be more critical of my analysis? Ultimately, I was stopped out by a considerable number of pips.
  • #8
  • Mar 9, 2016 6:32pm Mar 9, 2016 6:32pm
Hey there Ponzi JR,

Well, the reading of the chart is quite ok, however, there are a few factors that could have worked against you.

1.- The move from that double top was quite extended, and it certainly needed a little bit of a rest, so the retracement that took you out should be considered as something normal.

2.- There is a very steep trendline from your double top formation that has actually been broken, retested and sustained, that could have been a clue for your to be cautious about the position.

3.- There is a 159.80 level on your daily chart that could pose a bit of a difficult support area to break.

4.- You have to add to that level the fact that 160.00 is a pretty round number and buy orders are bound to be at that level, if only for a short period of time.

5.- Trading a Yen pair, you have to consider the sentiment of the market. At the moment is kind of changing every 5 minutes, so to speak, but you had the bad luck of entering this position on a risk on day, which is generally going to mean Yen weakness.

I hope that can help you a little bit.

Best of luck with your next trades!
  • #9
  • Edited 7:02pm Mar 9, 2016 6:46pm | Edited 7:02pm
Your trading system is fine - but you should define it a bit better - "engaging" in profit target of 500+ pips while at the same time having a very tight SL of 70 pips will make you stopped out too many times, and many of those many times you would have been right...(P/L ratio of 7:1 is extremely high for swing trades)
By assessing a profit target of 500+ pips, this makes you a so called swing trader - therefore you should adjust your strategy for swing trading. It takes time and experience. So long story short this is what I would do IF I decided to enter like you did (at 160.111 short).
Too tight of a SL, nothing more.

Also - you were in profit for 70+ pips if I'm not mistaken. Have you ever used a trailing order? (i.e. while executing your short order simply add instead of stop order - trailing stop order - that way you will be on the path of cutting your losses significantly. If you had put a trailing order of lets say 70 pips large (initial size of your stop loss), you would have been stopped out around breakeven (minus brokerage comission(s)).
A few words of wisdom - marubozus are huge bodied candles without shadows whatsoever - their bodies being large, try to wait for next candle's retracement of that marubozu. I understand you were afraid the price would have gone away from you and you would be late for the short (as it would me) - but in time and experience you will realize marubozus will require special attention and in more than 50% cases you can wait for a retrace of the marubozu in the next trading session.

Anyway, hope I was helpful, it's easy to be a general after the battle.

Small note: I cant remember last time I had SL sized less than 200 pips on GBP/YPY - I'm a swing trader.
Small note 2: Your logic is ok (of course it has room for improvement) - your execution is not. Positive sign: You seem to be studying candle patterns. Negative sign: you seem to have problems with money management - too tight of an SL may prove I'm right. Not a criticism, just an observation, I used to be like that.
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  • #10
  • Mar 9, 2016 10:44pm Mar 9, 2016 10:44pm
your double top is flawed, it is actually not a double top at all.
a double top must have the tops equally high,
the second tops close must not exceed the previous tops wick by it's close,
and must not go lower than the first tops close.
also a doji is not a reversal candle. excuse me for saying it but I think the logic is a bit off.
I like the sl placement though
Bulls are stupid Animals!especially when Im short!
  • #11
  • Mar 10, 2016 2:37am Mar 10, 2016 2:37am
Draghi speaks today and the market has been waiting for a while which is why there is a lot of whipsawing.

Expecting a good clean 500 point move just before then is too optimistic.
The greatest enemy of a good plan is the dream of a perfect plan.
  • #12
  • Mar 10, 2016 3:04am Mar 10, 2016 3:04am
The logic is sound and is similar to the way I look at things (multi-timeframe analysis).

I would say that your stop loss is extremely close to your entry though.

I am looking at shorting GBPJPY as well at the moment.
  • #13
  • Mar 10, 2016 4:12am Mar 10, 2016 4:12am
unless you monitor UJ price action closely I'd recommend you don't trade GJ at all. Clearly seen on H4 UJ price moved into strong demand area made a DB and propelled higher. That's reason why GJ/EJ/CJ rallied yesterday, well aside from CJ, which also moved due to CAD news.

So yeah, good strat overall, but pay VERY close attention to UJ. Then you can trade GJ.
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  • #14
  • Edited 5:44am Mar 10, 2016 5:11am | Edited 5:44am
Hi Ponz,

cs patterns which emerge in the middle of the week are more reliable than those at the beginning or end, monday is testing the waters, friday is end of week and the next trading day is monday again.
dojis are better when they have long wicks in both directions = the pressure is on. you want to have trapped buyers/sellers for strong moves. trapped buyers would be in a failed breakout above 162.50. you were one of the trapped sellers (failed continuation/hold of strong down move on tuesday)
Invincibility lies in the defence, the possibility of victory in the attack
  • #15
  • Mar 10, 2016 7:00am Mar 10, 2016 7:00am
Quoting silverheat
Hi Ponz, cs patterns which emerge in the middle of the week are more reliable than those at the beginning or end, monday is testing the waters, friday is end of week and the next trading day is monday again. dojis are better when they have long wicks in both directions = the pressure is on. you want to have trapped buyers/sellers for strong moves. trapped buyers would be in a failed breakout above 162.50. you were one of the trapped sellers (failed continuation/hold of strong down move on tuesday)
Nice post.

Liquidity pool created in that price area just bellow the gap opening will be tapped over and over as long as there are sellers with such tight stop losses like yourself Mr Ponzi. Try to have that perspective in mind too when determining your SL vs profit target.
Suffice to say, that liquidity pool consists of buy orders which are SL's for short positions, and relatively close to the current price. Also, you haven't answered my question: You assessed a profit target of 500+ pips, while simultaneously setting a SL based on 1h chart? If so, why? - i.e. why wasn't your SL based off daily chart, which dictates it should be where (or around that level) I marked it.
  • #16
  • Mar 10, 2016 8:48am Mar 10, 2016 8:48am
Quoting roughtrader
your double top is flawed, it is actually not a double top at all. a double top must have the tops equally high, the second tops close must not exceed the previous tops wick by it's close, and must not go lower than the first tops close. also a doji is not a reversal candle. excuse me for saying it but I think the logic is a bit off. I like the sl placement though
Am I not correct in employing the logic that:
Doji --> indecision between buyers and sellers about price level --> possibility of current trend ending! and perhaps reversing?
  • #17
  • Mar 10, 2016 9:45am Mar 10, 2016 9:45am
Quoting Ponzi Jr
{quote} Am I not correct in employing the logic that: Doji --> indecision between buyers and sellers about price level --> possibility of current trend ending! and perhaps reversing?
Your analysis is thin and incomplete. As for the doji, it is just one, very minor, piece of information, that plays an insignificant role in trading. In your chart, it says the market is pausing, but its up to you to figure out why its pausing. There is an underlying narrative here, and you have not indicated an understanding of that narrative. Without the narrative, you will not be able to understand the charts nor the TA. From my point of view, this week, the structure of GBP$ and GBPJPY crosses has been buy, with GBPAUD sell to neutral. My suggestion: stop trading candles and start trading structure. Good luck.
  • #18
  • Mar 11, 2016 2:20am Mar 11, 2016 2:20am
Quoting Ponzi Jr
{quote} Am I not correct in employing the logic that: Doji --> indecision between buyers and sellers about price level --> possibility of current trend ending! and perhaps reversing?
FFS I answered your question before .

The market was waiting for Draghi.
It was worried he would say something that may in a roundabout way weaken the Yen.
People stopped Buying the Yen .
Draghi spoke.
Look what happened to the Euro

In situations like this double tops head and shoulders the zumba bar you keep going on about and everything else mean nothing.

If he says something that will cause the market to go against you it goes against you.

But you still get people on here saying " My 'system' says sell, so I sell"......guess what Mr Draghis system said buy!
The greatest enemy of a good plan is the dream of a perfect plan.
  • #19
  • Mar 11, 2016 2:59am Mar 11, 2016 2:59am
Quoting steve10%
{quote} FFS I answered your question before . The market was waiting for Draghi. It was worried he would say something that may in a roundabout way weaken the Yen. People stopped Buying the Yen . Draghi spoke. Look what happened to the Euro In situations like this double tops head and shoulders the zumba bar you keep going on about and everything else mean nothing. If he says something that will cause the market to go against you it goes against you. But you still get people on here saying " My 'system' says sell, so I sell"......guess what Mr Draghis...
there is that of course, the mighty Draghi spoke

when i told someone everyone's freaking out when Draghi speaks, they stared at me with blank eyes asking "who's Draghi?"

you may also want to consider the BOJ is not happy with the current yen strength, and making noises @111-112, Ponz
Invincibility lies in the defence, the possibility of victory in the attack
  • #20
  • Mar 11, 2016 2:32pm Mar 11, 2016 2:32pm
Quoting silverheat
{quote} there is that of course, the mighty Draghi spoke when i told someone everyone's freaking out when Draghi speaks, they stared at me with blank eyes asking "who's Draghi?" you may also want to consider the BOJ is not happy with the current yen strength, and making noises @111-112, Ponz
My sentiment exactly. I had to google him 😁. As someone who bases trades almost entirely on technicals, I rarely pay attention to things like that. Perhaps I should though, to avoid trading around such events, in the interest of avoiding being stopped out in the shorter run.
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