20 Jan 11 - Bearish Bat Pattern on USD/CHF - H1 Chart/ M15 Entry

This following post will serve as a reminder to stay away from taking a trade prior to a news release even if there is a valid Harmonic Setup as news releases might sometimes cause price volatility. In addition, it was also written by one author of a trading book whom I couldn't remember, where he mentioned that trading should be done when the market is quiet and that is the best point in time where you can get it and ride the waves. I guess I flouted this rule and thus this trade failed.

I was initially thinking if it was wrong for me to enter this trade in the presence of some long range bars but this point was not valid as price stopped at the PRZ and then jumped on the release of the news.

I would consider that this was a very nice setup except for the fact that the news release upset the trade's turnout. Nonetheless, a great lesson learnt and with a proper risk management in place, I got to look forward to another trade after having to return part of my earlier profits back to Mr Market.

Now, back to the trade setup observed.

The PRZ was defined by the following Harmonic Ratios:

1. 0.886 XA @ 0.96195
2. 2.0 BC @ 0.96280
3. 1.618 AB=CD @ 0.96199

Having tested the PRZ and reversed as seen on the M15 chart, I proceeded to short this pair.

Trade Details

Date: 20 Jan 11
Time: GMT 14:45
Entry Price: 0.96186 (2 Batches)
S/L: 0.96500 (31.4 pips)
T/P: 1st - 0.95900 (28.6 pips), 2nd - 0.95450 (73.6 pips)

Trade Update

The S/L was triggered for both batches on 20 Jan 11, GMT 15:09 at 0.96508, resulting in a loss of 32.2 pips.

Reflections

The setup in this case was correct except for the fact of the News Release which was due approximately 15 mins after the trade execution. This move might be considered a bit risky and in this case, it was considered to my mistake to have taken this trade. This will serve as a reminder for future trades though.

In trading, we seek to minimise our risk exposure and in this case, I have flouted this cardinal rule by taking a trade just minutes before a news release. If the trade was done probably 2 hours before the news release, it might have been different. So in future, I will have to be more careful.

I am very glad that with the implementation of this blog, it has done wonders to my Forex trading, especially in the department of discipline. It has been my routine to updated ALL my trades and be very critical of my own trades be it that they are winning or losing trades and from there improve on my trading.

I have never believed that a small effort employed in this case has gotten me such a great step forward in my trading as I started picking up flaws and mistakes in my trading which allowed me correct them.

Trading is a serious business and we should keep proper records of our trading and even our thoughts before and after a trade as some ideas may just pop out and help us better our trading just as it has done so in my case.