I have been trading FX for >3 yrs.
Let me use this forum to trade usdyen over the next few days in a mostly systematic rule-defined way. Hopefully, markets will cooperate and it will be a good exercise.
Rationale for Set-up
Today's range 200 pips from 88.14 to 90.14. Looking at the chart it has gone parabolic. Breached important level of 90 today. Prices tend to collapse after such parabolic moves. Good time to start scaling-in for a short in small size. I am thinking of doing something like below:
Scaling-in the position
Initiate short at 90 with 0.25% risk(0.25% loss for 1 big figure = 100 pips move), keep adding to short at each 25 pips in increments of 0.25% risk. So, if yen reaches 92, we will have 2% risk with average price at 91. So, we will be at 2% loss with yen at 92.
After 92, add 0.25% at every 50 pip increment. So, if price goes to 94, we will have total risk of 3%. Our average for 1st 2% risk would be 91 and for last 1% risk, average would be 93. So, total loss with price at 94 would be 2%*3+1%*1=6+1=7%. This will be my full position.
Target
Target is below 88, so if price reverses after touching 92,
we will make 6% (=2%risk * 3 big figures) on the trade.
Trade Management and Scaling-out
I am willing to have a roughly 10% "worst case loss" on this trade. So, I will scale-out of the add-ins at every 80 pip correction. Why 80 pips, well no definite reason, with high volatility, getting a 80 pip correction won't be too hard. This 80 pip scale-out will happen only for trades entered beyond 92. So, for scale-ins entered below 92, we will not scale out. We want to have a core 2% risk position at the minimum, with average at 91.
Stop and Worst Case Loss
I want my STOP to be at 96. This is comfortably above important levels of 95, 95.5 etc. where barrier one-touch options might be present.
Worst case - parabolic move continues without any 80 pip move correction. The total loss would be:
7%+3%*2(from 94 to 96) = 13%.
Let us see how this trade goes.
So, sell orders 0.25% risk per big figure at 90, 90.25, 90.5, 90.75, 91, 91.25, 91.5, 91.75, 92, 92.5, 93, 93.5, 94.
Let me use this forum to trade usdyen over the next few days in a mostly systematic rule-defined way. Hopefully, markets will cooperate and it will be a good exercise.
Rationale for Set-up
Today's range 200 pips from 88.14 to 90.14. Looking at the chart it has gone parabolic. Breached important level of 90 today. Prices tend to collapse after such parabolic moves. Good time to start scaling-in for a short in small size. I am thinking of doing something like below:
Scaling-in the position
Initiate short at 90 with 0.25% risk(0.25% loss for 1 big figure = 100 pips move), keep adding to short at each 25 pips in increments of 0.25% risk. So, if yen reaches 92, we will have 2% risk with average price at 91. So, we will be at 2% loss with yen at 92.
After 92, add 0.25% at every 50 pip increment. So, if price goes to 94, we will have total risk of 3%. Our average for 1st 2% risk would be 91 and for last 1% risk, average would be 93. So, total loss with price at 94 would be 2%*3+1%*1=6+1=7%. This will be my full position.
Target
Target is below 88, so if price reverses after touching 92,
we will make 6% (=2%risk * 3 big figures) on the trade.
Trade Management and Scaling-out
I am willing to have a roughly 10% "worst case loss" on this trade. So, I will scale-out of the add-ins at every 80 pip correction. Why 80 pips, well no definite reason, with high volatility, getting a 80 pip correction won't be too hard. This 80 pip scale-out will happen only for trades entered beyond 92. So, for scale-ins entered below 92, we will not scale out. We want to have a core 2% risk position at the minimum, with average at 91.
Stop and Worst Case Loss
I want my STOP to be at 96. This is comfortably above important levels of 95, 95.5 etc. where barrier one-touch options might be present.
Worst case - parabolic move continues without any 80 pip move correction. The total loss would be:
7%+3%*2(from 94 to 96) = 13%.
Let us see how this trade goes.
So, sell orders 0.25% risk per big figure at 90, 90.25, 90.5, 90.75, 91, 91.25, 91.5, 91.75, 92, 92.5, 93, 93.5, 94.
