30 Dec 10 - Bearish Alternate Bat Pattern on GBP/USD - H1 Chart

I was initially planning to stop trading for the year and wait till Jan 2011 to resume trading when I saw a nice signal forming on the GBP/USD. It was a very nice setup as the pattern was aligned with the primary trend and thus a decision was made to go short on this pair.

On the H1 Chart, the following validated the Bearish Alternate Bat Pattern:

• A confluence of 2 Harmonic Ratios - 1.13 XA @ 1.55318 and 3.14 BC @ 1.55168. (Note: For Alternate Bat Patterns, the AB=CD pattern is not required.)

In addition to the setup seen on the H1 Chart, added confidence in this trade was gained when I saw a the CD Leg of a potential Bullish Butterfly Pattern forming. In essence, I was trading the CD Leg formation in this case and since I was in the direction of the price move, I was more willing to take this trade since the profit potential in this case was perceived to be greater.

Trade Details

Date: 30 Dec 10
Time: GMT 08:00
Entry Price: 1.55069
S/L: 1.55500 (43.1 pips)
T/P: 1.53652 (141.7 pips)

Trade Progress

The 1st Batch was closed on 30 Dec 10, GMT 10:32 at 1.54622, netting a profit of 44.7 pips when price broke the 0.382 Retracement Level of the AD swing.

Then 2nd Batch was closed on 30 Dec 10, GMT 14:57 at 1.54617, netting a profit of 45.5 pips when protective stop was triggered.

Reflection

It was a nice trade done. Despite the fact that I was taken out at the protective stop when the news was released, this trade was nonetheless a nice one as the price did hit the desired profit area.

Attached is a screen capture of the price move to the profit objective.

28 Dec 10 - Bearish Gartley Pattern on NZD/USD - H1 Chart

Liquidity has been quite low in the market since the middle of December and prices were choppy as a result.

Having seen a Bearish Gartley Pattern forming with the following to validate the pattern, I decided to go short on this pair:

1. A confluence of 3 Harmonic Ratios - 0.786 XA @ 0.75240, 1.618 BC @ 0.75435 and AB=CD @ 0.75240.

Trade Details

Date: 28 Dec 10
Time: GMT 08:35
Entry Price: 0.75264
S/L: 0.75850 (58.6 pips)
T/P: 0.74188 (107.6 pips)

Trade Progress

As it turns out, the trade resulted in a loss with price failing to move lower after testing the PRZ. Loss was 58.6 pips for both batches.

16 Dec 10 - Bullish Deep Crab Pattern on GBP/USD - H1 Chart

In this trade, I would consider that the setup was valid but trade management wise was not done well in this case.

Signals validating the Bullish Deep Crab Pattern were the following:

1. A confluence of 3 Harmonic Ratios - 1.618 XA @ 1.55997, 1.27 AB=CD @ 1.55977 and 3.618 BC @ 1.55777.
2. A support at psychological level at 1.5600.

Trade Details

• Date: 16 Dec 10
• Time: GMT 12:00
• Entry Price: 1.56151
• S/L: 1.55195 (95.6 pips)
• T/P:  1.58664 (251.3 pips)

Trade Progress

The trade was closed when the S/L was triggered on 17 Dec 10, GMT 14:08, resulting in a loss of 95.6 pips for the 2 batches.

Reflection

Trading will usually involve risk and in this case, the loss was taken. Then again, after the trade was over, a post trade reflection revealed that if a proper trade management was enforced in this case, the worst case scenario for this trade would have been a break even. Although it was planned for the price to be move to break even when the price hit the 0.382 Fibonacci Retracement Level, as price failed to form higher highs, it could have prompted a move to adjust the price to break even but it was not done.

Thus, it is always a new learning experience for each trade done.

Interestingly though, although I am in the red when it comes to pips count, capping my risk at 5% of my trading account for each trade has still maintained my account in the black and I would consider this a very good risk management tool.

Lastly, it has been traditionally known that liquidity will drop in December and thus trading will get a little more challenging and it is interesting to note that when liquidity drops, patterns will not occur as frequently too which could also be a warning to stay away for this period.

08 Dec 10 - Bearish Extreme Harmonic Impulse Wave on USD/JPY - M15 Chart

This is another trade done on Extreme Harmonic Impulse Wave which did not turn out quite well.

In this trade, I have triggered the trade on a more leading time frame which will involve some risk.

In this case,  I had expected the the resistance at 0.786 Fibonacci retracement level to hold but price breached the level at the later part of the day which resulted in a loss.

Trade Details

• Date: 08 Dec 10
• Time: GMT 08:24
• Entry Price: 83.761
• S/L: 84.200 (44 pips)
• T/P: 82.972 (78.9 pips)

Trade Progress

The trade was taken out at a loss for both batches on 08 Dec 10, GMT 13:18. Loss taken for both batches were 44 pips each.

Reflection

I would say that sometimes losses are inevitable when it comes to trading but in this, to prevent this trade from  resulting in a loss, I could have waited for a confirmation on the H1 chart before entering on this trade. It would have been laggy as compared to the M15 chart and some "premiums" would have to be paid for a safer trade entry on the H1 chart though but it is definitely safer and the signal generated would have been more accurate.

07 Dec 10 - Bearish Deep Crab Pattern on AUD/USD - H1 Chart

I would consider this trade an interesting one when it comes to the decision making part as to whether to take the trade or not.

Prior to the trade execution, the following thought process occurred:

A check with the D1 chart showed that there was a price rejection at 0.99351 region which was the 0.618 Fibonacci Retracement level which gave me a selling bias. Primary trend in this case is a down trend which is currently experiencing an upward retracement, i.e. correction.

Having decided on my trade position for the day, there was a dilemma now, there were 2 potential patterns forming, the first was a Bearish Crab Pattern which employs a 0.618 XA retracement (note: a Gartley Pattern also has a 0.618 XA retracement) and the other was a smaller pattern which was the Bearish Deep Crab Pattern which is characteristic of a 0.886 XA retracement.

Since both patterns were quite nicely projected, I decided to project both patterns out and observe the price action at the PRZ.

As it turned out, the price action revealed a Bearish Deep Crab in play. The chart attached above showed that price was not able to rally to the Bearish Crab Pattern and respected the Bearish Deep Crab Pattern's PRZ (attached below) instead.

It should be noted that trading is a calculated risk where we trade on a high probability, low risk setup but that does not mean that losses will not be experienced though.

The following validated the Bearish Deep Crab Pattern:

1. 0.886 XA retracement which pointed to a Bearish Deep Crab Pattern.
2. A confluence of 3 Harmonic Ratios - 1.618 XA @ 0.99513, 1.27 AB=CD @ 0.99475 and 2.24 BC @ 0.99545.
3. Signal to go short was when price closed below the PRZ.

Trade Details

• Date: 07 Dec 10
• Time: GMT 11:16
• Entry Price: 0.99498
• S/L: 0.99800 (30.2 pips)
• T/P: 0.98610 (88.8 pips) - 0.886 AD Swing

Trade Progress

The 1st batch was closed on 07 Dec 10, GMT 14:52 at 0.99208, netting a profit of 29 pips which the 2nd batch was closed when the T/P was triggered on 08 Dec 10, GMT 13:18, netting a profit of 88.8 pips.

Reflection

This is a nice trade done and some discretion was made here on the T/P. Since the trade was done in the direction of the primary trend, I decided to target at a more ambitious price objective.

01 Dec 10 - Bearish Gartley Pattern on GBP/USD - H1 Chart

When the signal was forming on this pair, it was initially pointing to 2 possible patterns, the Gartley or a Crab Pattern. However, as the CD leg was near its completion, the price action at the PRZ revealed that the pattern was a Bearish Gartley Pattern.

In this case, the following validated the pattern:

1. 0.618 XA retracement which pointed to 2 possible patterns initially - a Bearish Gartley Pattern of a Bearish Crab Pattern.
2. A confluence of 3 Harmonic Ratios - 0.786 XA @ 1.56110, 1.27 BC @ 1.56105 and AB=CD @ 1.56418.

It should be noted that for a Gartley Pattern to come into play, it should have a minimum AB=CD completion and in the case of this trade, the completion of the AB=CD was my requirement to go short on this pair. In addition, the AB=CD in this case was considered to be at the extreme end of the PRZ and should price action failed at this extreme end of the range, it would have given me even more confidence.

Trade Details

• Date: 01 Dec 10
• Time: GMT 13:21
• Entry Price: 1.55975
• S/L: 1.56600 (62.5 pips)
• T/P: 1.55024 (95.1 pips)

Trade Progress


The 1st batch was closed on 01 Dec 10, GMT 15:15 at 1.55636, netting a profit of 33.9 pips.


The 2nd batch as closed on 01 Dec 10, GMT 16:55 when the protective stop was triggered and thus resulting in a break even.

30 Nov 10 - Bullish Extreme Harmonic Impulse Wave on USD/JPY - H1 Chart

This is one of the patterns which I seldom trade for the reason that there are lesser confirming signals to confirm a trigger. Then again, when such signals occur, they do provide some nice trading opportunities.


In the case of this pair, there were a few good lessons to learn from this trade.


Price was in a strong up trend (0X) when it corrected (XA) and failed to rally further as expected and from there price took a plunge. After the plunge, price was well supported at the 1.618 extension of AB.

The signal to long was at the close for Piercing Pattern. 


Trade Details

• Date: 30 Nov 10
• Time: GMT 15:00
• Entry Price: 83.701
• S/L: 83.30 (40.1 pips)
• T/P: 84.281 (58 pips)

Note: Interesting, after I triggered the trade,  price rallied a little before going back to retest the support and created a divergence. As seen in the chart, the price has made a lower low but the RSI was not showing a lower low. In cases such as this, it creates a very powerful signal to show that a rally is impending.


Trade Update


The 1st batch was closed on 01 Dec 10, GMT 12:41 at 83.901, netting a profit of 20.0 pips while the 2nd batch was closed when the T/P was triggered on 01 Dec 10, GMT 14:22, netting another profit of 58.0 pips.


Reflection


In trading, there are many techniques which can be trades so long as we know what we are doing. In the case of this pattern, they do occur but it is just that I seldom trade them or should I say that I seldom pick them up unless the common harmonic patterns are not showing up as often that I will start looking for such impulse waves.


Thus, in this case, it has also instilled in me that I have to be more flexible sometimes as there are a lot of opportunities and that I will have to keep my mind and eyes open to see them instead of just fixing on patterns.

Trading Performance for Nov 2010

Despite a rough start at the beginning of the month, the overall performance for Nov 2010 was considered to be a great month and a net profit of 320.9 pips were gained.


Attached is the breakdown for the trades done for Nov 2010.

Of the 22 trades done, 14 were profitable, 2 broke even and 6 were losses. The success rate was 72% which was considered to be quite consistent with Oct 2010.


I would consider this performance a good one as I am seeing consistency in my trading performance and in trading, this is of great importance as I am looking at growth.


Trade Reflection


I am feeling more comfortable as I trade now as the risk management rules put me in a more comfortable spot where I know that at any point, my risk is only 5% of my trading capital. With the former in mind, trading becomes mechanical and void of emotion which is important for trading.


For this month, I saw a growth of 28% in my trading account and this is considered to be great!


Meanwhile, there is still plenty of room for improvement when it comes to trading and I am looking to improve my success rate up to 80 to 85%.