HLHB Weekly Update – June 18, 2010

PoD Chart

With the return of risk appetite, the euro continued its nice run this past week, now up 500 pips from the lows earlier this month. Unfortunately for me, I haven’t been able to get in on this reversal! The EURUSD has been rising and rising and rising…

What’s really unusual about this week was the huge rebound in risk appetite. I guess I could understand why the com-dolls are rallying – their economies are doing pretty awesome. But what I can’t seem to figure out is why the euro and the pound are rallying. Is the World Cup taking traders’ attention away from the ever-present debt concerns in the euro zone and the UK?!

It turns out the World Cup did have some effect on the recent economic data. Like Pip Diddy mentioned in his daily roundup, the surge in UK retail sales was mostly a result of TV purchases, possibly by those who wanted to stay glued to the tube watching the soccer matches. It’s just too bad that David Beckham isn’t playing this year because I probably would’ve bought a brand new extra-large TV screen too. I’m kidding, I’m kidding!

For now, it looks like debt woes are starting to subside as governments drafted up plans to cut back on their spending sprees. Aside from that, the recently held bond auctions in Spain helped revive investor confidence when demand for Spanish bonds were higher than expected.

I’ve also been thinking… The problem with trend following systems is that if I miss an entry, I am prone to missing big moves. While my signals are there to prevent me from getting faked out, I think that it can also be a little detrimental. I was doing some reading this week, and I came across something pretty interesting. The author said that missing a trend was just as bad or even worse than getting faked out. The reason being that one good trend can make your whole year.

Here’s an idea… How about I enter 0.25% of my account on the initial crossover (stochastics should also not be in overdone conditions), then, once price goes above my 30-pip filter, I will add the remaining 0.75% to make the full 1%. By doing this, the trades I miss will be far less while still keeping risk in check. What do you guys think?

  • PabloFrancesca

    I sometimes use that strategy too, especially on my long term trades. I still think you need to work some candlestick analysis into your trading. I use to trend trade on short term trades, but I got tired of getting in too late and getting out too late. Look for candles with long wicks after obvious trends that stop at fib extensions and retracements.

  • Huck

    I do use candlestick analysis in my discretionary trading.:) The HLHB system is a mechanical system I’m developing that is purely indicator-based, something like the Pip Surfer’s Cowabunga system.

  • PabloFrancesca

    I sometimes use that strategy too, especially on my long term trades. I still think you need to work some candlestick analysis into your trading. I use to trend trade on short term trades, but I got tired of getting in too late and getting out too late. Look for candles with long wicks after obvious trends that stop at fib extensions and retracements.

  • Huck

    I do use candlestick analysis in my discretionary trading.:) The HLHB system is a mechanical system I’m developing that is purely indicator-based, something like the Pip Surfer’s Cowabunga system.

  • kanakzz

    How about entry on 38% – 50% retrace of the trend change candle ? Thats what I do ..
    1. Entry on the first bearish candle after the trend change.
    or 50% retrace of the trend change candle.

  • kanakzz

    How about entry on 38% – 50% retrace of the trend change candle ? Thats what I do ..
    1. Entry on the first bearish candle after the trend change.
    or 50% retrace of the trend change candle.