Pick of the Day: USD/JPY – Trade Closed

Trade Closed: 2008-10-08 19:23

My trade closed as USD/JPY rose to my adjusted stop during the morning US trading session.

1st Half: +125 pips
2nd Half: +250 pips
Total: +1.5% gain

So, the coordinated global rate cut couldn’t bring back confidence to risk today as equities and carry trades fell after a brief rally. It was an unprecedented move, and the lack of market confidence shows how intense the fear is out there. Looks like we have a long way to go of more pain and more volatility, but with fear so extreme, I think we may soon be heading into the “dusk before dawn”….stay tuned!

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Trade Adjustment: 2008-10-08 09:00

Time to adjust my stop once again as my second profit target, 100.50, was hit as USD/JPY fell through out the Asian trading session.

Adjust stop on remaining position to 100.50. Trailing stop by 125 pips from here on out.

We just saw an unprecedented move in history today with a coordinated global rate cut from the US, UK, Eurozone, Switzerland, Sweden, and Canada. The Fed cut US interest rates by 50 basis points, bringing the federal funds rate to 1.50%.

It’s been a wild morning in the markets and will probably continue to be volatile. Let’s see how traders react to this event and see if confidence returns to the system. Let’s ride!

Trade Adjustment: 2008-10-07 12:10

USD/JPY continued to rally into the Asian where the pair saw 103.00 and my trade was triggered. There was enough selling interest there during the morning European trading session to push USD/JPY back down to 101.50, hitting my first profit target along the way.

Half of my position was closed at 101.75 to lock in +125 pips. Adjusted stop on remaining position to breakeven at 103.00.

If the pair does make it down to 100.50, I will keep the position open and adjust my stop to 101.75 and see if the market will continue to fall further. Stay tuned!

Trade Idea: 2008-10-06 18:34

PoD Chart

What’s Up! I’m taking another look at USD/JPY, and I know what everyone is thinking: “Agaaaiiiiinn!” Yes, again as I love to trade the current macro events with this pair as it seems its behavior correlates to the global markets’ risk tolerance.

With the view so negative on risk tolerance because of the credit crisis, I continue to like a short on this pair, but probably at a better price. On the one hour chart, it looks like I may get a better price at the Fibonacci retracement levels and hopefully the speculation that we may see rate cuts from the Fed may take the pair there. Huh? That doesn’t make sense. “Isn’t a rate cut supposed to be bad for the US Dollar?” Yes and no. A rate cut will usually bring in US Dollar sellers, but remember that movements in the USD/JPY have been based on global risk tolerance recently. So, if we see a rate cut, that may boost risk tolerance across the board as confidence goes back into riskier plays like carry trades (i.e. buying USD/JPY or equities). If this does happen, I think it will be short lived and traders will view any type of rally as a selling opportunity into the idea that we have further to go as far as the pain the credit crisis will bring.

So, here’s what I’m going to do:

Short USD/JPY at 103.00, stop at 104.25, pt1 at 101.75, pt2 at 100.50

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

If the trade does trigger and hit the second profit target, then I will keep my trade open and trail my stop from there. Stay tuned!

20 comments

  1. Piphacker

    This was a very good trade call … I was also inn at 103.17 and just ends Up With +50 Pip’s … Nice Shot Pip. lol

    Reply
  2. Piphacker

    This was a very good trade call … I was also inn at 103.17 and just ends Up With +50 Pip’s … Nice Shot Pip. lol

    Reply
  3. enochbenjamin

    DAMN! I really wanted to get in on this one and slept right thru the alarm.

    Oh, well… next time.

    Good call!

    Reply
  4. enochbenjamin

    DAMN! I really wanted to get in on this one and slept right thru the alarm.

    Oh, well… next time.

    Good call!

    Reply
  5. fed

    hi Pipcrawler, great job at analysing it. I have entered in and I am still in as we go to the final level and I am watching it closely. I have a question though. you said up on your post ‘Half of my position was closed at 101.75 to lock in +125 pips’. which brocker do you use and how do you lock in the 125 pips? and what does that mean? do you guarantee yourself the 125pips? can you please explain briefely about that comment. I sometimes use trailing stops but again I am not too crazy about it unless if I am up over 100 pips. Thanks

    Reply
  6. PipcrawlerPipcrawler

    Thanks for the comments everyone.What I usually do is put in two separate orders. For example, with this trade let’s say I put in one order to short at 103, stop at 104.25, and TP(take profit) at 101.75. Then another order with the same entry, stop, but TP at 101.50….does that make sense? so if my orders are triggered, they’ll both enter at the same time and automatically close if the TP or stops are hit. If my first TP is hit, then that half of my trade closes and all I have to do is adjust my stop on the remaining position… I hope this helps…

    Reply
  7. fed

    hi Pipcrawler, great job at analysing it. I have entered in and I am still in as we go to the final level and I am watching it closely. I have a question though. you said up on your post ‘Half of my position was closed at 101.75 to lock in +125 pips’. which brocker do you use and how do you lock in the 125 pips? and what does that mean? do you guarantee yourself the 125pips? can you please explain briefely about that comment. I sometimes use trailing stops but again I am not too crazy about it unless if I am up over 100 pips. Thanks

    Reply
  8. PipcrawlerPipcrawler

    Thanks for the comments everyone.What I usually do is put in two separate orders. For example, with this trade let’s say I put in one order to short at 103, stop at 104.25, and TP(take profit) at 101.75. Then another order with the same entry, stop, but TP at 101.50….does that make sense? so if my orders are triggered, they’ll both enter at the same time and automatically close if the TP or stops are hit. If my first TP is hit, then that half of my trade closes and all I have to do is adjust my stop on the remaining position… I hope this helps…

    Reply
  9. barrooo

    pt2 was hit in the asian trading session, another good trade pipcrawler, you’re certainly racking up the pips on the USD/JPY at the mo.

    Reply
  10. barrooo

    pt2 was hit in the asian trading session, another good trade pipcrawler, you’re certainly racking up the pips on the USD/JPY at the mo.

    Reply
  11. fed

    Pipcrawler thanks for replying back. OK so you are entering with 2 entries which makes sense now, so if the whole trade goes against you, you will loose both entry. Is that correct?

    Reply
  12. PipcrawlerPipcrawler

    Yes. Remember to adjust your position size so that your total loss should never be more than 1% of your account balance. Me personally, for a lot of my trades I don’t risk more than 0.25% – 0.50% of the account I am trading….

    Reply
  13. fed

    Pipcrawler thanks for replying back. OK so you are entering with 2 entries which makes sense now, so if the whole trade goes against you, you will loose both entry. Is that correct?

    Reply
  14. PipcrawlerPipcrawler

    Yes. Remember to adjust your position size so that your total loss should never be more than 1% of your account balance. Me personally, for a lot of my trades I don’t risk more than 0.25% – 0.50% of the account I am trading….

    Reply
  15. Anaiya

    This was a good call pipcrawler. I had initially entered only one position but, as we saw, it went in our favour. The Aspen group made a similar call, well done and keep them coming.

    Reply
  16. Anaiya

    This was a good call pipcrawler. I had initially entered only one position but, as we saw, it went in our favour. The Aspen group made a similar call, well done and keep them coming.

    Reply

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