If you have been reading some of my posts, you’ll know that I started off this blog trading forex on the 1 min chart EUR/USD.
I had been doing quite well for a few months but volatility went into the shitter as of late. Here is an article that goes into detail over the volatility as of late in the EUR/USD. And for me and my strategies, has become a lot tougher to trade especially on the 1 min time frame.
I also highly recommend Cory’s site – if you get a chance to browse his articles, they are all good reads. He is one of the few guys that I really take seriously when it comes to trading the markets and advice.
So rather than act like a 6 year old who just had his favorite toy taken away and totally quitting forex, I took a look at the majors (EUR/USD; USD/JPY; GBP/USD; USD/CHF) on the 5 minute charts for some trades the past 2 weeks. Followed them for a few days and noticed that a lot of good trades had been setting up on the 5 minute chart. So I adapted. Ditched only trading 1 minute on just the EUR/USD. Now I hawk all the majors on the 5 minute chart. And I realize you’re less likely to get stop hunted compared to the 1 min chart (kind of duh).
Decided to take a few low risk trades this week and so far 4 for 5 and my sole loser did not exceed any of my winners. I also kind of hit a *light bulb* moment. And that moment was to take a partial. Nothing groundbreaking or earth shattering. Just take a partial – it’s like that first shot of tequila and lime, it takes the edge off.
I had normally only ever thrown on a lot or 5 mini lots and either it hit my target or it hit my stop. Instead I put out two separate orders, half the usual quantity each.
Let’s say for example price has a big move down and is pulling back. I will look for signs of a reversal back into the trend direction (short) like a consolidation breakout, a long pin bar, engulfing candle, etc. Where I use to enter with just 1 order and have a target set at just above the previous low or sometimes slightly exceeding it, I would have those frustrating moments where my target would barely be missed and it would come back to stop me out at BE or small gain. Or even worse, I’d start getting anxious and take profits before my target was hit and then watch is shock as prices continue rocketing in my intended direction.
Now that I am using 2 orders, I take my partial at 1x risk, no matter where it is. If the stop is 2 pips above the previous high, making it a 5 pip risk, my first target is set at 5 pips. Once that first target is hit, I’ll move my remaining order to BE. Usually the next target is at a logical point (slightly beyond previous swing) or 2x risk or if price is really rocketing down I will just keep moving my target down and trail the stop with it. Sometimes you get lucky and get 3x+ what you expected and sometimes you’ll only make out with your first target. But that’s not really the main point.
The main point (for me) is that it keeps your emotions in check. You got some money in the bank with the 1st target, no more risk on the second and it now it’s a waiting game. You lose that anxious feeling that you need to take what you can get once you see green and it allows you to stay patient and squeeze as much out of the second order as you can.
And I think it smooths out the bottom line. You won’t have as many wild swings into red or green and you will more than likely have lots of small losses, lots of small wins and that occasional big win. I can live with that.
Boats and hoes soon. With my boy Sykes. Moet, Lambos and 50k+ Instagram followers.
Oh boy I can’t wait.