Forex Trades Updates & Adjustments

With the weekend approaching, I decided to make a few adjustments to my open forex trades and trade orders based on this week’s events.

Short GBP/USD

Original Trade Idea: Swing Short Setting Up on Cable?

GBP/USD 4 Hour Forex Chart

GBP/USD 4 Hour Forex Chart

Thanks to the combination of a dovish Bank of England meeting minutes and the ECB quantitative easing announcement pushing forex traders into Greenbacks, there was no pullback to be had in Cable higher this week. The pair is currently testing the 1.5000 area, so I’m going to step away from this trade by closing my open short orders at 1.5385 and wait to see how forex traders handle this major psychological area. No trade.

I’m still fundamentally bearish on GBP/USD and will consider shorting on a sustained downside break of 1.5000 if it happens.

Short NZD/USD

Original Trade Idea: Swing Forex Short on NZD/USD Range

NZD/USD 4 Hour Forex Chart

NZD/USD 4 Hour Forex Chart

NZD/USD never even thought of moving higher on the week as the market went into bear mode, both on USD strength and in slight reaction to the surprise Bank of Canada rate cut this past Wednesday.  I’ve decided to close my open orders at .7900 with that level so far away from the market now, but I’m still short biased on this pair in the short-term.  I think throwing on nibbler shorts here in this area makes sense, but I’ll wait for a move back up above .7500 before planning out my next move.

Short GBP/NZD

Original Trade Idea: Shorting GBP/NZD into Downtrend

GBP/NZD 4 Hour Forex Chart

GBP/NZD 4 Hour Forex Chart

It was a “perfect” textbook technical short setup, but the surprise Bank of Canada rate cut changed the game on this trade by pushing all of the comdolls lower against the majors. It’s very likely that I will get stopped out on this trade, but based on the potential R:R at this point, I’m just going to leave it on and sticking with my current stop.  Because I’ve already accepted this as a loss, the possibility of this area holding and reversing far outweighs the couple of small percentage points it has left to go.  And even if I’m stopped out, this market still looks like the downtrend hasn’t been invalidated.  I’m still short biased and would look for another short entry if I got taken out of this one.

Overall, on the trades I should have went short at market went my way, where the trade I should have been conservative went against me but still looks valid.  Funny how that works out sometimes.  I still haven’t lost that GBP/NZD trade yet, but this whole week is definitely one to review and learn from this weekend.  Until next week, have a great weekend!

 

 

  • Pipwisher

    Pipcrawler I am confused.
    You said in the original post on GBPUSD that you would take this trade if it would hit your entry target around 1.5385. Now you say you close all your shorts at 1.5385. Which shorts? You couldn’t have taken this trade as you planned.
    The price is already down to 1.5000 without ascending to 1.5385 level at all. So what trade is that you are closing?
    I am confused.

    Kind regards.

    • Pipcrawler

      Hey Pipwisher…I said that I closed my open short orders, not open short positions. So I was never in the trade. Hope that clears it up.

      • Pipwisher

        Definitely clears up, thank you.
        Something else if you please:
        (The link you have given (3 yrs ago) for ATR calculation is not available any more. Here is what I understand):
        On a weekly chart, read the ATR values at the left(opening of the week) and the right side(closing) of the candlestick. Take the difference and divide by 2. Is this correct? I am not quite sure about it, something looks fishy on this calculation.

        Thanks

        • Pipcrawler

          Here’s the link: http://www.babypips.com/forexpedia/Average_True_Range

          It’ll explain how ATR’s are calculated, but for my setup, I use a 20 period calculation rather than the 14 used in the definitely link. Also, most charting platforms have this indicator, so you really don’t need to know the calculations to get the final ATR number, only that it is the average volatility over the period you want it to be measured at. Of course, you’ll at least want to go through it once to make sure you understand the calculation in case you want to tweak it based on your own trading strategy.

          • Pipwisher

            I have the ATR on my tradestation. 20ATR reads on last week’s EURUSD 246 pips in average. So, this week I should add/subtract 123 pips to the weekly opening level. Is this what you are saying?
            Thanks

  • Pipcrawler

    Hey @pipwisher:disqus…I’m answering your ATR question here since the thread was starting to narrow down 🙂 I use the weekly ATR in several ways, all depending on what kind of catalyst or volatility to expect for the week. I do sometimes use it in the way you described, as a top and bottom range marker from the week opening price, typically on weeks without a major catalyst. It helps me see where there may be potential reversal points, based on the idea that there are a lot of mean reversion trading systems out there at work (buy at “extreme” lows or sell at “extreme” highs) that use some level of standard deviation as their entry/exit points. Again, on weeks where there is a major catalyst, like last week, I wouldn’t really consider this but it’s something I always keep an eye on. I also use the WATR number as a basis for my stop on swing ideas on the theory that if a market moves that far within the weekly time frame, there must be a change to sentiment that could invalidate my trade thesis, and therefor I must exit the trade. Those aren’t the only ways to use ATR, but that’s how I mainly use them as a part of my overall trading framework and it’s always a work in progress. Hope that helps.

    • Pipwisher

      Thanks Pipcrawler, I appreciate.
      I am studying your framework. So far I found it quite meaningful. Thanks for sharing the quality work.
      Cheers.