“Huck loves her bucks!” I always say. The problem, of course, is how to make those bucks!! In this blog, I'll be posting my adventures as I traverse the forex world, while trying to catch some pips along the way. To do this, I will make use of classical charting methods as well as develop my own Playing the Cable's Range - Busted!
Trade Closed: 2010-05-28 23:03
It looks like risk appetite dominated the market yesterday when China went out with a statement saying that it has no plans of reevaluating their European debt holdings. I don't know about you but this sounds like another chance for traders to sell at higher prices... The overall trend is obviously downwards, and, unless we see real positive news from the UK, I think we will continue to see the pound head lower.
Total Loss: -100 pips / -1.0%
It just sucks a little bit, as there was a point where I was up about 80 pips already! That's almost a 1% gain! I could feel the money in veins! Not only that, but it seems that price dipped right after stopping me out! Was my stop loss too tight? Should I have put it a little bit higher? Should I have put my stop to break even when I was up already? What do you guys think?
Trade Idea: 2010-05-25 23:03
While the GBPUSD has been ranging, I do believe that risk aversion is the prevailing market theme right now. On Monday, the pound dropped despite the European holiday, as a major bank in Spain got seized by the Spanish central bank. Apparently, this caused another run of risk aversion which led to losses to both the euro and pound.
Now, no major data has been released lately, but I think that there are some concerns regarding the issues between North and South Korea. I don't think it was the main cause of strong drop in the euro and pound yesterday, but I think this could be a factor if tension continues to build up. If the situation continues to worsen, I think this will spook traders like the movie "A Nightmare on Elm's Street" did to me!
Looking ahead, it looks like we've got a bunch of high impact reports coming out. From the UK, CBI realized sales and the Nationwide HPI report are both due to be released tomorrow. I read Pip Diddy's economic roundup on the UK today, and it seems that despite the upward revision in their GDP figure, economic growth isn't looking too good for the UK. Could we see some disappointing figures in these reports?
Now, on the stateside, we've got durable goods, unemployment claims, preliminary GDP data and the PCE report all coming out this week. That's a whole bunch of reports! I think that with all these reports being top tier events, it could spark a lot of volatility that may help my trade get triggered.
Technically, I'm looking to play the range. As you can see from the chart I posted above, strong resistance could be found at the 1.4500 handle. Despite being tested numerous times in the past two weeks, this level has remained intact. Also, given the absence of hard-hitting economic data, I'm hoping that resistance would hold.
Since I am entering at the top of the range, I can set a nice reward-to-risk ratio. Instead of my usual large stop, I have set my stop loss 100 pips away, which is lower than the pair's daily average true range. I will lock in profits once the pair falls to the middle of the range and again at the bottom of the range.
Here's my plan:
Short GBPUSD 1.4500, pt1 at 1.4400, pt2 at 1.4270, stop loss at 1.4600. I will risk the usual 1% of my account.
Don't forget to add me up on MeetPips.com!
Related Posts:
- Waiting for the Cable Bears to Growl - Closed Open Orders 23:16 06 June 2010
- Jumping in on the GBPUSD Downtrend! - Trade Busted 23:05 31 March 2010
- Another Shot with Cable? - Close Open Orders 21:50 08 July 2010
- Short Signals On the GBPUSD! - Trade Closed 22:30 20 June 2010
- GBP/USD: Potential Straddle Play 02:00 30 March 2011
Archived Comments (4)
Forex Blog: The Loonie Adventures of a Forex Noob
Nothing really wrong with your trade, I think. However perhaps your tp1 should have been 1.4450. Some resistance at 1.4440. Would have been a safer bet.
Hucklekiwi Pip: I see than all the traders in this section have two profits, and only when the first profit is done move the rest of the trade to BE, ¿ Why ? I don't know, but if i have a trade with 50 pips at my favour i put the BE. In many cases, i observ some trades that changue to losses only because the trader don't have the profit than he mark at the begining, one trader need to be flexible please.
That is a good point. Perhaps using a percentage will be more apt? For instance, if the trade goes 50% my way (with respect my profit target), I will move my stop to breakeven. What do you think?
Yes huck that is a very good idea but in my opinion you need to give the trade room to breathe. So what a master trader I read about would do in this situation is to move the stop loss to exactly half way between its original position and the break even point once price reaches half way to the target.
You will have to do whats right for your system but yes ofcourse in general once you get profit you want to protect it but at the same time still allow the trade to breathe.
Huck youre one innovative trader thats for sure.