Forex Trade Review: EUR/CHF Long

The SNB finally gave franc traders the thing we’ve all been anticipating: negative interest rates! ¬†With EUR/CHF finally getting away from that 1.2000 level, I decided to close and lock in profits ahead of year end.

Original Trade Idea: Taking the SNB Trade on EUR/CHF

EUR/CHF 4 Hour Forex Chart

EUR/CHF 4 Hour Forex Chart

For those who missed it, the Swiss National Bank decided to go negative on interest rates, triggering a very fast sell off in the Swiss franc during the London session. Unfortunately for long EUR/CHF traders likely myself, the move was fade, likely on broad euro weakness. This move by the SNB boosts speculation we’ll see more easy money policy from the ECB as well. With the move failing to hold, a negative carry on this trade, and the end of year coming up, I decided to close my EUR/CHF long position this morning manually at 1.2047:

Total: +37 pips/ +0.17% gain

The negative carry was a big factor in my decision to close as the it took off about 5 pips worth of profit off of my trade. Given the behavioral history of this pair, I think it would’ve been a very slow grind higher (if at all because of euro pressures) so it made sense to close to avoid getting eaten away by the negative carry.

That’s likely it for me for 2014, so I’ll spend the next week review my trading journals and reflecting on what was a positive year until Q4 where I seemed to have gone out of sync with the markets. Stay tuned for that forex blog post as I’m sure there will be a few lesson to learn and apply to 2015. Have a great holiday!

  • ForExchange

    Hi Cyclopip,

    I entered this trade last week about the price where you entered. Funny, I was also thinking on the effects of the negative carry trade.

    What I learned from the trade is that next time I put my order right at the 1.2000 handle and not above. The big price movement did not occur until PA did not reach the level. That would have mean +10 pips.

    Have a good holiday too, and we are waiting for your trade results,


    • Cyclopip

      That extra 10 pips would have been nice, but at time I put the trade on, there was speculation that the defense would start around 1.2010. So, I went with that. May in the future I’ll be a little more patient, but just gotta play every situation by ear. Thanks for your thoughts ForExchange…have a great weekend!