Day Trade Short on EUR/USD – Trade Closed

Trade Closed: 2011-09-20 13:50 ET

Good afternoon! This market is full of surprises lately, and today was no different as rumors of another Swiss National Bank intervention kicked off some nice volatility. All is quiet now, so I decided to close my trade for a small profit. Check it!

Before you move on, for those who are not familiar with my framework, signals, setups, or acronyms, please visit my discretionary trading framework blog.

PCDPOD20110920.review.png

The chart above pretty much says it all. That rumor that the SNB may peg EUR/CHF to a tighter target gave a quick kick in the pants to the euro to go higher, and it looked like sellers were ready to jump on that opportunity quick. With sellers moving quickly, EUR/USD was pushed lower until it found support at the minor psychological level of 1.3650.

With the European session closed and traders taking trades off ahead of tomorrow’s FOMC statement, I have decided to close my trade down as well for a nice, small profit.

Closed manually at 1.3680.

Total: +25 pips/ +0.27% gain

So, another small winner, but what could I have done differently? Well, I probably should have closed when the pair did test 1.3650. That move was sparked by an event that was not directly related to the market I was trading. In situations like these, extended moves are more the exception rather than the norm.

Besides that, I thought about closing right away after the rumor came out, but by the time I found out what the deal was, the pair was already trading near my stop. So, I let it ride. While it looks like I made the profitable decision this time, it may not turn out the same way in the future. Just something to keep in mind.

Overall, a win is a win and I’ll take it! That’s it for me today. Let’s see what the market shows us tomorrow, and be sure to follow me on Twitter and Facebook as I like to point out setups on the fly there. Good luck and good trading!

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Trade Idea: 2011-09-20 8:25 ET

Good morning forex fanatics! I’ve been watching EUR/USD this week and it looks like sellers are not willing to lose the 1.3700 area to buyers. Will this area continue to hold today?

PCDPOD20110920.png

As we can see in the chart above, the week open price has held like a champ so far. This tells me sellers are still in control and given that there are talks that Greece is in some serious trouble, I think sellers may continue to dominate this area today. Also, we just got mixed housing data from the US (housing starts -0.5% and permits +3.2%); to me the starts is the bigger factor, and the weakness in that number could bring short-term risk aversion.

So, I have decided to short, with a stop using a quarter of the daily average true range. My risk will be 0.50% since this is a day trade, and my target will be today’s low, giving me a 2:1 return-on-risk potential.

Shorted EUR/USD at market (1.3705), stop at 1.3750, pt at 1.3605

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly.

Stay tuned for updates and adjustments by following me on Twitter and Facebook! Good luck everyone!

  • Ggggg

    looks likes its working
     

    • Juandavid Industrial

      i hope so

  • pipcrawler

    Thanks for the comments everyone!  I decided to take a small profit.  I hope everyone caught some pips off of that move sparked by SNB rumors.  Some nice action!

    • Pipmaestro

      yah i was right

  • Ggggg

    oh no

  • Tansen

    Yeah it wasn’t bad I targeted 1.3660 actually but when I moved my stop up to BE it struck before price actually went back down, still walked away with profit though, nicely done

  • pipmaestro2

    i see support at 1.3650