It was something that I haven’t seen happen in months—or maybe even at all this year, come to think of it—but all of a sudden, it happened just this past week. It was an exceedingly rare trading opportunity, and although it was one we couldn’t see coming in advance, we suddenly couldn’t miss it once it materialized. I hope you saw and capitalized on this trading opportunity, too.
What was it, you ask? Well, it wasn’t the trend-based short in AUD/USD, and it wasn’t the smash bar set-up in EUR/GBP, either. Honestly, it wasn’t even our USD/SGD trade that yielded a quick and decisive profit of more than 250 pips in only 3 days!
The unique trading opportunity I’m talking about was that all three of these set-ups happened together in a kind of rapid-fire succession that’s simply not common within our methodology. So amidst the rush of added emotion from what is admittedly a unique trading scenario, I’d like to show you how we planned and executed multiple trades, all while staying committed to our rules for entry and risk management.
Why This Trading Opportunity Was So Unique…
I’ve said many times before that Lazy Traders can typically expect to trade 3-4 high-quality set-ups each month, so you can imagine my surprise—and excitement—when that many popped up seemingly all at once this past week. Now I know that trading multiple positions is commonplace to some—especially scalpers and intraday traders—but for longer-term swing and position traders, this was truly an outlying trading opportunity that can test ones mettle, not to mention their conviction and commitment to the strategy.
Actually, whenever a trading opportunity that’s this uncommon occurs, there can be a lot of second-guessing as a result. Are you really seeing the set-ups correctly on the charts? Is there something you’re missing? Should you try adding in an outside indicator(s) for confirmation? And would you run the risk of overtrading if you were to take all of these set-ups concurrently?
I think the fact that each of these set-ups occurred at key levels of support/resistance, and with such clearly defined entry signals, may have helped many overcome these doubts and counterproductive thought patterns. The proof was right there on the charts, confirming that we did, in fact, have an ultra-rare trading opportunity in not one, not two, but three distinct currency pairs. From there, it’s a trader’s job to take the appropriate actions, and to focus only on the methods, even if there’s a special situation such as this one at hand.
…and How We Traded it
A trading opportunity involving three different set-ups may seem complex, but as it turns out, it was really pretty routine. In fact, the three were noticeably similar, so as you’ll see, this ultimately became a case of applying one consistent methodology—just like we would if it were only a single set-up. Here’s what we did, and why:
AUD/USD: This was a classic example of selling the rally in a downward trend. With price having rallied to test a prior swing low which also coincided with the 50-period moving average (MA), and given two bearish pin bar reversals on the chart, probability was clearly favoring a move to the downside. The entry occurred below the prior day’s low, minus the spread and an additional pip, and an initial stop loss was placed above the prior day’s high, plus spread and an additional pip for a short trade initially targeting the prior swing low.
See video: How We Made 2% Trading AUDUSD
USD/SGD: This was essentially a mirror image of the AUDUSD trade, as we’re instead buying the dip in an upward trend with all the same conditions—like price testing a previous swing high and two bullish pin bar reversals confirming—in play. Orders were placed above the prior day’s high, plus spread, plus one pip, with a stop below the low, plus spread, plus pip. As the trade began to work, conservative traders trailed the stop behind the low every two days to limit risk and preserve profits.
EUR/GBP: In essence, this trade was an effort to sell the top of an established range that had held no less than 5 times before. A reversal on the hourly chart and a “smash bar” formation on the daily helped trigger the trade. And, much like the AUDUSD trade, entries and stops were placed using the prior day’s low and high, respectively, and leaving room for the spread and an additional pip.
You know what they say: “When it rains, it pours!” and nothing really describes this trading opportunity much better than that. It’s still a bit hard to imagine that out of the dreadfully slow and sideways summer months would come such excitement and volatility, and yet here it is!
The events of this past week, though, also convey many valuable lessons for traders. Lessons in poise, in patience, and as it relates to staying calm and committed to trading what you see, even if it’s a scenario you didn’t expect, or even one you’ve never encountered before. So how did you fare with this particular trading opportunity, what have you learned from it, and how will you be better and more informed as you continue trading here at the onset of Q4 and beyond?
Latest posts by Rob Colville (see all)
- Trade with The Lazy Trader in 2017! - November 18, 2016
- Round the Clock Trader Live - How to Trade the News - November 8, 2016
- Why There's Little Room for Expectations in Trading (or in Life) - October 14, 2016