10 Apr Trade Review GBPNZD 20210407
Play: Mean Reversion to D1 Bear Engulf 2nd Chance Entry
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How was the Entry?
Entry was good. There was a wide IB range indicating momentum and I had placed a Buy Stop Order at a possible IB extension up which came during C TPO enhancing the momentum behind the move. Entry could have been closer to IB edge but I wanted a little more confidence and not get straight in on the firs TPO outside of IB. I have seen before where that happens and price reverses. Usually 3 or more prints outside is a good indicator. This time I did it about 5 prints above with the spread on top of that it wasn’t the best Entry execution although due to being a momentum trade this can be somewhat forgiven.
Odds enhancer: nearby D1 VWAP in UT, Price faltering below H4 LKC in R
How was the SL placement and sizing?
Again good. Due to the momentum nature of the trade the SL placement cutting through formation can be forgiven. Sizing was good due to using FX synergy calculating position sizes.
How was the profit target?
Profit target was good okay even though Value edge would have netted nearly 3R there was a big LTF supply at value edge. ADR exhaustion was on the way as well which could have meant a continuation to the move although not likely due to D1 bearish sentiment.
How was the Exit?
Not good. I looked at how much price had traversed in accordance with the ASR and as it was nearly running out and there was ADR 0.5 high just above I pocketed profits without a price action based exit rule at 0.5R.
What would a price action-based exit have done for the trade?
A price action-base exit would have yielded 1R.
What would a time-based exit have done for the trade?
Time-based this would have yielded ‑0.1R due to the Return to Value play coinciding with a D1 Bear Engulf 2nd Chance Entry play
What could I have done better?
I could have instead of focusing on ASR focused on ADR as that is ultimately what give the price it’s full range. Learned my lesson. Another obvious thing that I am recently struggling with is taking profits too soon and I should have waited for a price action-based exit. Live and learn.
A D1 narrative with a mean reversion to newly developed D1 supply even though being very bearish due to the large imbalance the most probable play for the 1st DTTZ was a mean reversion BUT, an even more confident play would have been a Return to Value at newly developed D1 supply which came at the 2nd DTTZ which I failed to take.
Another observation is that ADR can get exhausted during London but within a Bearish market sentiment it is not likely for a continuation in initial direction.
As mentioned at the 2nd DTTZ there was a reversal in line with a Return to Value coinciding with a 2nd chance entry on the D1 Bear Engulf (within a larger timeframe bearish sentiment). I think I kinda zoned out on focusing what went wrong with the first trade and perhaps I was beating myself up a bit for not executing my plan perfectly. Although I tracked the opportunity within my Playbook and will aim to catch it next time. Progress, not perfection.
Premarket prep on the day
Daily Report Card on the day