With big moves thanks to the BOJ and the weekend approaching, it was time to do a quick review and update on my trades.
Original Trade Idea: Short EUR/JPY on a Pullback?
There’s not much to say here other than, “thanks Bank of Japan!” Much, much earlier than was anticipated, the BOJ decides to increase the monetary policy stimulus to 80 trillion Japanese yen annually (up from the 60 – 70 trillion Japanese yen range previous) to help boost the economy, fight declining inflation conditions, and prepare for another potential sales tax hike in 2015. From that point on, it was all about yen selling from forex traders, pushing most yen crosses to around a 2.00% change on the day or more–many times more than the average daily change in value. For my EUR/JPY short, that meant a quick move up to my second short entry at 138.50, and inevitably, my stop loss level at 139.70 to close my position out for a small loss.
Total: -200 pips/ -1.00% loss
The only thing I probably could have done better was to pay more attention to the BOJ. Their monetary policy decisions have been snoozers for quite a while, so I thought there was a low probability of big volatility. And with having stops on, I felt comfortable leaving my trade and orders working, as usual with recent monetary policy decisions from the BOJ. But this is the one time they surprise, I wasn’t on the ball and so I’ll have to take a small hit to the account. Besides that, the setup was fine and I’ll continue to take it in the future.
Losses are always painful lessons, but on the bright side, I’ve got two other trades working (my short positions on EUR/AUD and GBP/CAD) that are both profitable at the moment, and I think have a good chance of staying that way if we continue to shift into a risk-on environment thanks to free money from central banks still coming in.
That’s it for now. Thanks for checking out my blog and have a great weekend!