The Trade: GBP/JPY Short
Date: April 14 2008, 12 noon
Entry: 199.56
Lots: 10
Stop Loss: 199.86
Target: 199.26
Reason/Setup:
This trade was entered based on the OzFX setup on 1 hour chart. The AC and AO showed red and the Stoch was moving down. The entry also seem valid on the Elite 15 minute setup, but I was late with the entry. But the main signal was based o the OzFX system I placed the stop 30 pips away and the target 50 pips away.
Result:
For a volatile pair like this with a wide spread, a 30 pip stop is not sufficient. Also in the OzFX chart, we can see where I made the mistake with the trade. While the AC and AO indicators were hinting on a down move, the price action was saying something different. From the candles prior to the one I entered, we can see that the trend was still undecided. We had couple of higher closes followed by lower close. This indicates that the market is choppy and there is no definite trend. In these circumstances, its better to not enter the trade.
Date: April 14 2008, 1:30pm
Total Pips: -300
Profit/Loss: $296.78
Rating: 2
Lesson: DO not enter a trade based just off the indicators. Most indicators are lagging. Use price action to confirm the indicator before entering the trade.
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