Documenting my losing trades is not anywhere near as appealing as writing about my winning trades. However, it is a necessity to document these and actually put a lot of effort in understanding such trades to identify if there were any improvements that should be made.
The following trade was executed on the crypto called Band.
This crypto was showing a series of higher highs and lower highs on the 1 hour chart. When the price action moved into the 200 period moving average and a bullish elephant bar was printed I went long, as per my strategy.
This was a relatively correct trade in terms of strategy but was this a perfect set up? No it wasn't. The reason why not is because the closing of the entry candle is at what is a clear resistance level if you look to the left of the chart where there was a pivot high at around the level I entered the trade, before pulling back. My rules actually tell me not to take trades where resistance is immediately close, unless volume is seriously spiked. In this case the volume was okay but it wasn't indicating a powerful move that would push through any imminent resistance.
Assuming the trade had been correctly taken in terms of strict adherence to all entry rules I made a mistake also in the position size, which did result in me taking an unnecessarily lower value position because I had the wrong stop loss level.
I have an amount to risk per trade based on the time frame that I am using. In this case the amount of financial risk I took was in line with my rules but I created a stop loss that was too generous. I am supposed to place my stop loss just below the opening of the bar in question that was the trigger for the trade.
Had this trade been successful I would have lost out on profits because my stop loss had been set too far below the trigger point of entry, well below the 200 period moving average.
The resulting loss is detailed below:
Trade Clearly!
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