My First Trade: AUDUSD – Closed Open Order

Closed Open Orders: 2009-11-08 21:04:43

PoD Chart

Good evening friends – here’s an update from my AUDUSD trade last week! It seems like I may have missed by a bit, as I was a little conservative and really wanted to enter at the trend line. The pair hit a low of 0.9026 before eventually shooting to the topside. The Fibonacci Retracement levels worked out well – too good, in fact – as the pair rallied quickly after hitting the 50% level. Despite the missed move, I think this trade idea was a step in the right direction. With the pair closing above 0.9200, I think I’m too late. Oh well! Could’ve been a nice trade!

Trade Idea: 2009-11-05 04:24

Late last night, while I was painting my nails, I read up a bit on the recent Fed statement. It seems that the Fed hasn’t really altered their stance on the state of the economy. For the nth time, they said that the economy was showing signs of improvement but once again, kept rates at ‘exceptionally low levels’. I think that this reveals that the Fed wants to remain cautious and that they fear that recent signals aren’t strong enough to warrant a rate hike. What does this mean for the dollar? Well, leaving the rate at a low level for an extended period of time could be bearish for the dollar as investors seem to be getting more and more risk hungry.

That being said, on the other side of the globe, the Reserve Bank of Australia has already raised rates twice, bringing it up to 3.50%. In fact, I just did some research and saw that this is the highest amongst all the majors! It’s no surprise that the Aussie has been on a nice run the past six months…

PoD Chart

So I took a quick look at the charts, and lo and behold, the pair has been on an extended uptrend since March. A clear signal to go long? As Pipcrawler always tells me – the trend is your friend. The question is though, where do I enter?

PoD Chart

After taking a look at the daily chart, Happy Pip suggested to me that I try to zoom into a lower time frame to try to get a better entry point. I then clicked on the 15 min chart and tried out the Fibonacci retracement tool. I noticed that the .618 Fibonacci level lined up nicely with the long term uptrend line at 0.9000! This is also a psychologically round number. Big Pippin once told me that big money (banks and other financial institutions) may place orders at such numbers, so we could see some buying pressure at that point.

Hmmm… a potential trade? I think I’ll take it! Here’s what I plan to do: Long AUDUSD at 0.9000, stop at 0.8900, take profit at 0.9200.

Pipcrawler told me to control my risk so I’m going to risk only 1% of my trading account per trade.

  • glide21

    Hey Huck, nice analysis and may work out. I suggest you watch the Dow and S&P as risk aversion comes into play. The equities have been struggling and the Aussie seems to follow equities. Once the NFP figures come out tomorrow we should get a clearer picture. GT

  • kamikazical

    This is a great idea for a blog, as I am currently at about the same point as you in my Forex education, maybe a month or so behind – just starting to feel like I’m ready to open my first real live account, so it should be an interesting read for me. Good luck on your trade.

  • Huck

    Great to hear from you guys. The Forex world is a wonderful place and I’m really looking forward to hearing more of your opinion in the coming days, weeks, months or even years! May we learn from each other, eh? :)

  • glide21

    Hey Huck, nice analysis and may work out. I suggest you watch the Dow and S&P as risk aversion comes into play. The equities have been struggling and the Aussie seems to follow equities. Once the NFP figures come out tomorrow we should get a clearer picture. GT

  • kamikazical

    This is a great idea for a blog, as I am currently at about the same point as you in my Forex education, maybe a month or so behind – just starting to feel like I’m ready to open my first real live account, so it should be an interesting read for me. Good luck on your trade.

  • Huck

    Great to hear from you guys. The Forex world is a wonderful place and I’m really looking forward to hearing more of your opinion in the coming days, weeks, months or even years! May we learn from each other, eh? :)

  • ronron

    Good for you. Just keep it nice and simple.
    The only thing I would caution is to stick to few instruments that you’ll know very well. Consistency is the name of the game. The same trade, the same set up and the same entry and exit set up.

    Also as you will notice the market moves up and down. Once you make money money protect it with tailing stops

  • ronron

    Good for you. Just keep it nice and simple.
    The only thing I would caution is to stick to few instruments that you’ll know very well. Consistency is the name of the game. The same trade, the same set up and the same entry and exit set up.

    Also as you will notice the market moves up and down. Once you make money money protect it with tailing stops

  • youngtiger

    I’m a newbie to Forex, just create an account with gomarket, put in $50 and learng to trade hopefully and the end of the month I’ll make some money! I’m reading and learning forex from this website.

    Can someone explain to me what is Margin and Free Margin?

  • Huck

    That’s a very common question among newbies, youngtiger. Head on over to the link I will post below for a very comprehensive explanation on the subject. It helped me a lot!

    http://www.babypips.com/school/margin_defined.html

  • youngtiger

    I’m a newbie to Forex, just create an account with gomarket, put in $50 and learng to trade hopefully and the end of the month I’ll make some money! I’m reading and learning forex from this website.

    Can someone explain to me what is Margin and Free Margin?

  • Huck

    That’s a very common question among newbies, youngtiger. Head on over to the link I will post below for a very comprehensive explanation on the subject. It helped me a lot!

    http://www.babypips.com/school/margin_defined.html

  • Lordpipi

    Nice one huck…. I can sense the passion on your analysis, you continue with this consistency and u will be a guru in no time….Lovely analysis for a rookie

  • Lordpipi

    Nice one huck…. I can sense the passion on your analysis, you continue with this consistency and u will be a guru in no time….Lovely analysis for a rookie

  • ssharma

    Thanks for the blog. I am learning and at this point I do not even have a demo account. Your blog will help me.
    What do you mean by “psychological” and how did you determine that fib .618 lines up with the long term uptrend

    noticed that the .618 Fibonacci level lined up nicely with the long term uptrend line at 0.9000! This is also a psychologically round number. Big Pippin once told me that big money (banks and other financial institutions) may place orders at such numbers, so we could see some buying pressure at that point.

  • ssharma

    To help me understand can someone post a chart for:

    Closed Open Orders: 2009-11-08 21:04:43

  • ssharma

    Thanks for the blog. I am learning and at this point I do not even have a demo account. Your blog will help me.
    What do you mean by “psychological” and how did you determine that fib .618 lines up with the long term uptrend

    noticed that the .618 Fibonacci level lined up nicely with the long term uptrend line at 0.9000! This is also a psychologically round number. Big Pippin once told me that big money (banks and other financial institutions) may place orders at such numbers, so we could see some buying pressure at that point.

  • ssharma

    To help me understand can someone post a chart for:

    Closed Open Orders: 2009-11-08 21:04:43

  • Huck

    Hey ssharma, thanks for reading my blog! By “psychological”, I was referring to those nice, juicy, round numbers with lots of zeros, like 0.9000. Round numbers like these are also known as easy levels or common levels. Traders usually place their stops or profit targets there.

    Regarding the Fibonacci retracement level, I figured that the price would bounce off the 61.8% level since it intersects the rising trend line.

  • Huck

    Hey ssharma, thanks for reading my blog! By “psychological”, I was referring to those nice, juicy, round numbers with lots of zeros, like 0.9000. Round numbers like these are also known as easy levels or common levels. Traders usually place their stops or profit targets there.

    Regarding the Fibonacci retracement level, I figured that the price would bounce off the 61.8% level since it intersects the rising trend line.