Before I call it a week, here’s a quick review of my short-term EUR/GBP forex swing trade which–thanks to Draghi–turned out to be a nice gain into the weekend.
Original Forex Trade Idea: Fading the EUR/GBP Rally
My idea to fade EUR/GBP earlier in the week worked out well thanks to the surprise drop in interest rates and a plan to purchase asset-backed securities (ABS) by the European Central Bank Thursday morning. Forex traders weren’t expecting the rate cuts, which is why we saw the strong reaction to the downside in the euro across the board.
I had contemplated keeping the trade open into the weekend in case we’d see a really big push to the downside, but decided to let my limit orders take profit at .7905 (announced on my Twitter and Facebook pages) as I remembered how much the euro has fallen over the past few months and that it may be due for a pullback for profit taking
Total: +80 pips/ +0.66% gain
In hindsight, taking profits looks like a good decision as .7905 was the day lows, but it could have easily gone much lower given the magnitude of the catalyst. Overall, I think this was a good trade and executed pretty well. The only thing I probably could have changed was my position size, but it was a short-term trade with a big catalyst coming up so I can’t kick myself too much for wanting to reduce my risk a little bit.
That’s it for this week. Thanks for checking out our blogs…have a great weekend and we’ll see ya next week!