Trade Closed: 2011-08-23 7:20
After days of watching USD/CAD closely, I finally closed my winning trade! I didn’t get to keep all of my gains though. Just when I was thinking of taking profits early ahead of Canada’s CPI report, the pair dropped down below .9900. It wasn’t enough to hit my adjusted stop loss just yet, but I decided to hold on to my trade anyway.
Too bad my attempt at playing the news report didn’t pay off by as much as I hoped! Canada’s core CPI came in at a 0.2% growth in July, which is in line with market expectations and a bit better than June’s 0.6% decline. The positive news was not only enough to trigger my adjusted stop loss at .9880, but it also went back down to the .9850 support.
Because of that, I lost 0.5% on my third position, ended up breakeven on my second, and pocketed a 0.68% gain on my first one. That’s a teeny 0.18% boost for my account, but I’m still happy about it.
As much as I regret not getting all of my profits, I still believe that adding on to my position was a good idea at the time. As for my exit strategy… well, I can work on that on my next trades.
How else could I have played this trade to get more pips? Any ideas?
Hope you’re still with me on my next trade!
Trade Update: 2011-08-19 1:00
Woohoo! So this is what a winning trade feels like! I’m up by more than a hundred pips on this USD/CAD and I don’t want to jinx it. I already added a couple of positions during the U.S. session, one at .9880 and another at .9930. To protect my profits, I also adjusted my stop to .9880 so I’ve got about 0.6% locked in just in case it falls back to my stop. Not bad, eh?
As planned, I kept a close eye on my open trade for almost the entire U.S. session, waiting for signs to either exit early or press my advantage. Fortunately for me (and unfortunately for the higher-yielding currencies), risk aversion loomed over the markets when Morgan Stanley announced a downgrade in global growth forecasts and pointed out that the U.S. and Europe are dangerously close to a recession. And when U.S. economic data (existing home sales and Philly Fed index) both missed expectations, the markets just went wild!
For now, it seems that the frenzy has died down a bit, probably because U.S. traders had to hit the sack while London traders haven’t had their morning coffee yet. However, we might just see the safe-haven rally carry on during today’s London session. As I mentioned in my tweet, gold is steadily climbing to new highs even though it’s just the Asian session and we might see more of that later on.
Do you think I should hold on to this trade until parity? Or should I just pocket my winnings right now? Let me know what you think through the comment box below or through any of these:
Talk to ya in the London and the U.S. sessions!
Trade Update: 2011-08-18 8:47
Aaaand I’m in!
Yesterday’s round of dollar-weakness provided me the opportunity to get triggered at the .9800 handle support that I was eyeing. As you can see from the chart, the pair dropped to the .9775 area before it bounced back up a bit. It missed my stop loss by 25 pips so I’m still in! Woot!
I still have to watch this closely trade though. Some of my friends are pointing out in our discussion below that USD/CAD has been making lower highs, and that I need more confirmation on the potential support area. That’s why today I’m watching the news with you guys!
At around 12:30 pm GMT, we saw that Canada’s leading index report and wholesale sales came in below consensus. As I mentioned in my latest tweet, I’ll be holding on to this trade but moving my stop to breakeven.
A part of me thinks that I should add to my position and press my advantage. However, I’m still on the fence because the U.S. still has a couple of reports (existing home sales & Philly Fed index) due in a few hours. What do you think would be a good strategy for today?
Can’t wait to hear what you guys think!
Trade Idea: 2011-08-17 6:13
Good day, everyone! How’s your trading going so far? As for me, I’m hoping to score a big win with this week’s swing trade idea. As you probably know, I’ve gotten the “Swing Trader” result on the “Which Trading Style is Best for You?” personality quiz so I’m sticking with that!
As Big Pippin pointed out in his Daily Chart Art today, there’s a descending triangle on USD/CAD’s 1-hour chart and the bottom of the triangle looks like a really strong support level. I’m planning to go long at that level because it lines up with last week’s low and the bottom of this week’s average range. On top of that, it’s also very close to the .9800 major psychological handle. That should hold, right? Here’s a chart of the descending triangle on the 4-hour chart:
Of course, it also depends on the Canadian and U.S. reports set for release in the next few days. Based on the economic calendar, we have the Canadian foreign securities purchases due today and this could show a decline in demand for Canadian assets.
If the actual figure shows a drop from 15.40 billion CAD to 10.33 billion CAD as expected, it would most likely be bearish for the Loonie. I’ll also be keeping a close eye on the Canadian CPI data due Friday. Both core and headline figures could print 0.2% upticks but, if they fall short of expectations, we could see a huge Loonie selloff.
As for the U.S., they are also set to release their inflation data this week. However, this probably won’t have much of an impact on dollar pairs since the Fed isn’t really worried about inflation. What could rock the Greenback and risk sentiment are the existing home sales figure and the Philly Fed manufacturing index. I have a hunch that weak data could spur risk aversion and trigger more dollar buying, but who knows? I’ll just make sure I’m in front of my computer during those releases so I could make the necessary adjustments to my trade.
Here’s my plan:
Long USD/CAD at .9800, 50-pip trailing stop initially set at .9750, ultimate PT at parity. I’m initially risking 0.5% on my first position but I plan to add another position in case USD/CAD breaks above the top of the descending triangle. If that happens, I’ll add every 50 pips and keep trailing my stop.
I know I shouldn’t count my chickens before they hatch but, if all goes according to plan, I could score a 10:1 win on this swing trade. With my 0.5% risk per position, that sums up to a 5% gain on my account, more than enough to erase my recent losses. Keep your fingers crossed for me, will ya?
See you around!