My losing trades that were initiated on the 15 August consisted of a failed long continuation on Oil and a failed breakout on GBP/NZD. There are actually some good learnings to be had from these trades.
Before I provide details of the losing Oil long trade, you can see from the post about my winning trades that I had been successful on a short Oil trade. See my separate winning trade blog post for the 15 August for details.
On the face of it the continuation entry at the pivot low looks good. After all, price had been moving up, broken above 200 period moving average and the entry candle also had some strong volume behind it (volume indicator not shown).
The issue with this trade was not the set up. There were a number of other issues with this:
Position size was incorrect and not in line with my rules. This was a 15 minute time frame trade and for me that allows me to take a risk of £34 but I took a risk of £68. Basically my position size was double what it should have been
Honestly, my original stop loss was at around £34 but I made the error of moving the stop loss as the trade was moving against me
Critically I entered this trade around 30 minutes before the volume typically dries up. It is not good to trade when there is low volume, it makes the moves you trade less reliable.
The learning from this trade is that I have changed my rules to restrict the hours in which I should enter a trade in Oil so they are restricted to typical higher volume periods. I am going to also apply this to other commodities.
The next losing trade was a breakout trade in GBP/NZD. Refer to the chart below for details on the entry.
This entry on the 1 hour chart met the criteria for my 'breakout' trading strategy. The price had remained within a relatively tight range where a clear resistance level was being respected, evident by the drawn horizontal line. I entered the trade at the closure of the candle with a stop loss slightly below.
On the higher time frame this FX pair has been extremely bullish and that is why I was waiting for a long entry. I had missed the initial move up, as you see to the left of the chart.
Unfortunately this trade didn't work out and was a failed breakout. The main comfort was that although this was a losing trade it was a good loser because I should have and did enter the trade. They can't all be winning trades, even when you follow your rules.
The net results of these trades are shown below.
Trade Clearly!
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