Hey, friends! Here’s a short story about a long candle that killed my Cable trade.
If you and I are friends on Twitter, then you would know that I shorted GBP/USD last week.
Who else is seeing that irresistible GBP/USD retracement on the daily? Placed a short order at 1.3150! #forex
— HuckleKiwi Pip (@LoonieAdventure) September 20, 2018
I also thought that the pound craze would be over. After all, most of the pound’s recent gains were from Brexit-related speculations. Also, I was expecting dollar bulls to make their moves ahead of the FOMC statement.
The setup looked too good to be legit!
That’s because it wasn’t.Turns out, there were still more than enough bulls willing to buy the pound.
Just hours after I placed my order, Cabinet Office minister David Lidington shared that Britain is “85 percent…90 percent of the way” to fixing the withdrawal agreement.
And if that wasn’t bullish enough, the U.K. also printed a retail sales report that blew the markets’ expectations out of the water.
GBP/USD popped up by a dizzying 150 pips in three hours before the bulls took a chill pill.
Unfortunately, I only set a 100-pip stop loss on my trade because Cable had already hit top WATR.
The trade set me back by 100 pips (-0.50%) even before I updated my trading journal!
I took a deep breath.
And then I took another.
And then I fell asleep.
When I woke up, I identified three lessons that could help my next trades:
First is that I really shouldn’t place orders ahead of top-tier events. Shorts can be squeezed, trends can be broken, and traders can be cray. Well, crazier than usual.
Last but not the least, I should probably widen my stops when trading longer time frames. Any tips on a good volatility stop for GBP/USD?
That’s it for me today! Sorry, it took too long for an update, but it took me a while to get over this fantastically short trade when I was expecting a swing setup.
I’m now looking for my next trade. Think shorting Cable is still a good idea? How about that parity trade on USD/CHF?
Don’t hesitate to give a shoutout!
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