Shorting EURUSD One More Time! – Trade Closed

Trade Closed: 2010-03-08 21:358

PoD Chart

Phew, this trade had me shaking like a rattlesnake’s tail the whole time!

It started off poorly, when price broke out of the top range. Fortunately, I gave my trade enough breathing room to prevent me from getting stopped out.

Like I mentioned in my weekly update, I got super scared that it would turn out like my last two trades, wherein I missed my profit target by one measly pip so I decided to lock in profits earlier. As it turns out, however, my profit target was soon hit. I’m just relieved though, for ending up with a win than a loss.

Closed 1st half at 0.1.3562: +118 pips
Closed 2nd half at breakeven: +0 pips
Total: 59 pips – 0.93% Gain

As you might have guessed, I just watched Alice in Wonderland recently. I absolutely loved it – Johnny Depp was amazing! Anyway, I’m going to be tuned in to the Oscars – I wonder what’s going to win Best Picture! I’m excited!

Trade Idea: 2010-03-01 22:32

PoD Chart

I took a look at Big Pippin’s chart art today here and it seems that EURUSD is now trading within a range. It has tested support at around 1.3460 three times already. Will the range hold? I hope so! With stochastics showing upward momentum, I think we could see price action move up again before finding resistance at around 1.3680. This is where I’m placing my limit entry order. I’m going to go with a relatively tight stop loss, putting my stop at 1.3740. If price breaks the 1.3740 handle, I think we could see a strong breakout. My first take profit points at 1.3550, this week’s opening price, with my ultimate target being the bottom of the range at 1.3465. I want my pips!

Fundamentally, only a couple of low key reports from the euro zone, namely their CPI flash estimate and PPI, are on today’s agenda. Their CPI flash estimate could show that price levels are still expected to climb by an annualized 1.0% while the PPI could post a 0.7% uptick for February. Although the ongoing Greek debt drama could continue to weigh on the euro, additional volatility this week could push the price up to my entry order. I’m also keeping a close watch on Germany and euro zone’s retail sales reports due Wednesday since these could print declines and reinforce the bearish sentiment for the euro zone. Aside from that, ECB President Jean-Claude Trichet‘s rate statement this week could highlight the prevailing financial and economic concerns in the region.

However, we’ll be seeing some fireworks as the non-farm payrolls report in the US will be released on Friday! Traders will be watching this and I think, whether it comes out worse or better than expected, we would see the dollar rally. If the actual number fails to meet expectations, risk aversion could surge and push the dollar higher. On the other hand, if the report comes out with an upside surprise, this could give more evidence that the US is performing better than other major currencies.

Again, here’s my master plan:

Short EURUSD at 1.3680, stop at 1.3740, take profit at 1.3550 and 1.3465

  • Helltopia

    Good call =)
    I never liked ping-pong (table tennis), but I love that sport when it comes to currencies :)
    Entered at 1.36970, TP1 was set at 1.36even and is locked in. Now I’m playing with the banks money… oh how i love saying that!
    Lets cheer it on to TP2 shall we? =)

  • Helltopia

    Good call =)
    I never liked ping-pong (table tennis), but I love that sport when it comes to currencies :)
    Entered at 1.36970, TP1 was set at 1.36even and is locked in. Now I’m playing with the banks money… oh how i love saying that!
    Lets cheer it on to TP2 shall we? =)

  • delvis

    This mite be a dumb question but when you talk about your take profits like TP1 and TP2. How is that exactly accomplished? When you open the trade do you open two positions with two separate exits? How do you close half of your position? I’m using mt4 with ibfx
    Thx

  • host07

    +1 (Post of delvis)

  • Helltopia

    delves
    You are indeed correct. I opened my trade with two half positions (making one ‘whole’ position in regards to money management), both sharing same stop-loss but have different target levels. I usually aim the first TP within reasonable profits (+50 pips is usually good, depending on pair of course…) and close out the first order when its reached. Then I move my stop-loss on the second order to break-even +spread, making the last open position risk free (hence the term ‘playing with the banks money’).

    I don’t use MT4, but FXCMs own platform, but I believe its possible to close partial positions on MT4 if you wanted. But I don’t like messing with open orders when a trade is first opened, I find it better to set two separate orders with defined TP/SL.
    Hope this made some sense :)

  • delvis

    This mite be a dumb question but when you talk about your take profits like TP1 and TP2. How is that exactly accomplished? When you open the trade do you open two positions with two separate exits? How do you close half of your position? I’m using mt4 with ibfx
    Thx

  • Huck

    @delvin and host07 Not a dumb question at all! I was confused with this strategy at first too! You can do this by setting two orders initially. Both orders should have the same stop loss but different profit targets. If say, you want to risk 100,000 units, each order should equal to 50,000. Another way of doing it is just putting one 100,000 unit position on the line. To close half, just set an order opposite your initial position (a buy order if you are short or a sell order if you are long) at the first profit target. Does that help? :)

  • host07

    +1 (Post of delvis)

  • Helltopia

    delves
    You are indeed correct. I opened my trade with two half positions (making one ‘whole’ position in regards to money management), both sharing same stop-loss but have different target levels. I usually aim the first TP within reasonable profits (+50 pips is usually good, depending on pair of course…) and close out the first order when its reached. Then I move my stop-loss on the second order to break-even +spread, making the last open position risk free (hence the term ‘playing with the banks money’).

    I don’t use MT4, but FXCMs own platform, but I believe its possible to close partial positions on MT4 if you wanted. But I don’t like messing with open orders when a trade is first opened, I find it better to set two separate orders with defined TP/SL.
    Hope this made some sense :)

  • delvis

    thanks guys. That clarifies things

  • Huck

    @delvin and host07 Not a dumb question at all! I was confused with this strategy at first too! You can do this by setting two orders initially. Both orders should have the same stop loss but different profit targets. If say, you want to risk 100,000 units, each order should equal to 50,000. Another way of doing it is just putting one 100,000 unit position on the line. To close half, just set an order opposite your initial position (a buy order if you are short or a sell order if you are long) at the first profit target. Does that help? :)

  • delvis

    thanks guys. That clarifies things