Both my GBP/USD & GBP/AUD ideas didn’t work out as I hoped, so it’s time to see what kind of lessons I can learn (or re-learn) from these forex trades.
Original Trade Idea: Trade Idea: GBP/USD Range Play
Sellers at the top of the range pointed out in my original trade idea weren’t able to hold the fort thanks to a ramp up in bearish USD sentiment after a dovish Fed statement, and bullish momentum in Sterling on reduced sentiment there will be a Brexit.
Cable rallied higher with few pullbacks, triggering both of my half positions at 1.44 and 1.45, eventually breaching the 1.4600 area. And it looked like 1.4600 would draw in enough sellers to hold last week, but we saw a strong break higher on weak USD sentiment at the start of this week to take the pair up to my stop out level at 1.4680 to close my trade out for a small loss.
1st half: -280 pips
2nd half: -180 pips
Total: -136 pips avg./ -1.00%
Overall, I probably should have just closed down the trade early as I recognized the shift in themes for both the Greenback and Sterling, but by that time, the market was already trading above 1.4600, making the R:R on closing early less attractive than just holding to see if the market would reverse lower.
Was that the right decision? Right now, it looks like closing early would have been the better decision, but only time and upcoming events will tell. With risk sentiment shifting today, it could turn out that going short may turn out to be the better longer-term bet. But either way, I played this idea exactly to plan, which I think is all I can control, so I’m pretty happy at least with the execution.
Original Trade Idea: Trade Idea: GBP/AUD Countertrend Long
This was an idea based on the shift in fundies, which turned out to be the right directional bias, but unfortunately for my trade, my entries were a tad too conservative.
Ahead of the RBA monetary policy statement, GBP/AUD did pullback from recent swing highs around 1.9270, but only enough to bottom out around 1.9015…just a few pips from my 1.9000 buy order! Trying to get in right at the major psychological level proved to be too conservative as the pair rocketed higher after the RBA announced a surprise rate cut from 2.00% to 1.75%, which quickly brought in a rush of sell orders on the Aussie across the board.
GBP/AUD was no exception to this move, shooting up as high as 1.9435 before settling down and holding in this area. With the market already near my max target of 1.9500, it’s obvious this is a missed trade with a low probability of working out if the pair made its way all the way back down to the 1.9000 handle. So, I decided to close my open orders to buy at 1.9000. No trade.
Even though I missed getting in the move by about 15 pips, I’m not sure I would do anything differently on this trade. More times than not, waiting for a retest of major psychological levels tend to be the best decision to get in the right price, but I could have played it a bit differently by scaling in around the 1.9000 handle with quarter positions, which would give me more leeway to be right while keeping my risk low.
What do you think about my trades? Could I have played them differently? Let me know your thoughts in the comment section below and thanks for checking out my trading blog!