This is a trade I took in daily time frame in XAUUSD or Gold vs US Dollar.
This signal was generated by my first system. The entry signals are as follows:
1. Candle must open above both ema=3 and ema=8.
2. Candle must close below both ema=3 and ema=8.
3. Stochastic (14,3,5) must be in Overbought area and crosses down.
Upon opening next candle, I entered. Stop Loss was at High of the Candle that crossed emas. The R/R is 1/3.
I entered again at the break of candle below both emas in H4 timeframe. But, the candle formed a pin bar.
1. Signal Accuracy: 90%. I entered exactly as the signals, but a little bit late. I was not at my computer when the next daily candle opened.2.
2. Money Management: I entered with one lot and with 100 pips stop loss, it’s $1000 risk to my $20,000 account. so it’s 5% risk of my capital. it’s too much. I have to risk no more than 2% in each trade.
3. there are good news about US Dollar strengthening as Trump moves into White House. So, Gold is expected to fall down as dollar moves higher.
4. Second trade Signal Accuracy: 0%. it’s completely wrong. Stochastic is moving up, candle was not closed yet. and Position size was 0.5 lot
5. I exited both trades because of the pin bar formed in daily and in H4 chart.
First trade: +$860
Second Trade: -$224
After Two Days:
I was right. market moved back up and my exit was at the good time.
1. My trade was opposite of weekly trend. Though the general trend of weekly timeframe is down, but short term trend was up.
2. I didn’t determine the possible move room of the short term daily trend. I was in profit for a nice $2800 once. I had to get out of my trade. It was about 14% of my total capital and it couldn’t get better for a single trade. I am not a long term trader and if trade gets as big as 10% of my total capital, I have to get out. I make sure I follow that rule next time.
3. I got into the trade late. my signal was generated earlier and if I had entered then, that would be a nice profit with a huge margin of safety.
Things To Do Next:
I have to code ( or hire a programmer) to code my indicator. It must generate a popup alarm, sound and may send email to my mobile whenever candle breaks above or below two emas.