H&S Trade Diary: 1-1

March 16, 2016

H&S Trade Diary: 1-1
Second trade for the Head and Shoulders strategy was a loser: USDJPY – 1.8% / 120 Pips

This trade took a bit longer to play out than our first trade. I was watching this Head and Shoulders pattern brewing on the 4 hour chart through the beginning of March:

H_S_diary_2

The neckline was a little noisy, but we got a clean break at 12 PM Tuesday 8th. The initial breakout candle closed substantially below the neckline, so I waited just over 20 minutes and managed to short the spike at 113.10:

H_S_diary_2b

The trade looked quite good at first. Price declined nearly 90 pips, but eventually reversed and our 120 pip stop was hit late on Thursday night.

If I was trading discretionary, chances are I would have taken profit on this trade (or at least moved stop to breakeven) … but our strategy rules are clear: Stop loss above the right shoulder, 1:1 break even trail and 1.5x take profit target. Will reassess these rules at conclusion of the experiment.

Points Of Interest:
Once again our stop could have been a lot tighter – trade only moved 15 pips against entry point (stop was 120 pips). This was also the case on our first trade and there may well be a pattern here. A stop loss level well below the right shoulder may be more appropriate – If our stop on this trade was only 50-60 pips, this would have been another successful trade.

Missed another set up while holding this trade. Considering high probability of H&S patterns, may be worth allowing two simultaneous trades (total risk 4%).

Considering low trade frequency, may have to test strategy for more than one month.

Score Board:
OG H&S: 1
Market: 1

Two trades down and the score’s one all … but our account’s still profitable! Great example of the benefits of trading with a positive risk to reward ratio. Tune in for the next trade.
———

Oscar Goullet – @FXtechs

Risk Disclosure: In addition to the website disclaimer below, the material on this page prepared by Australian Forex broker Vantage FX Pty Ltd does not contain a record of our prices or solicitation to trade. All opinions, news, research, prices or other information is provided as general news and marketing communication – not as investment advice. Consequently any person acting on a Forex live account it does so entirely at their own risk. The experts writers express their personal opinions and will not assume any responsibility whatsoever for the actions of the reader. We always aim for maximum accuracy and timeliness, and Vantage FX on the MT4 platform, shall not be liable for any loss or damage, consequential or otherwise, which may arise from the use or reliance on this service and its content, inaccurate information or typos. No representation is being made that any results discussed within the report will be achieved, and past performance is not indicative of future performance.

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