Partner Center Find a Broker

Am I stubborn or what? Despite GBP/USD going my way TWO times, I chose to keep my position, hoping to see my profit targets get hit. Now I see that this was a terrible decision as price reversed and triggered my stop loss.

I clearly realize that this was a mistake on my part. My initial analysis had been correct, but when conditions changed, I failed to adjust. I should’ve closed my position as early as Friday when the pair climbed after it had dropped following the worse-than-expected BBA Mortgage Approvals report from the U.K.

GBP/USD 1-Hour Chart

Stopped out at 1.6000: -122 pips / -1.0%

Yes, I am feeling bad about this trade since I took a loss when I could’ve avoided it. I let my emotions get the better of me like a silly noob.

Trade Idea

GBP/USD 1-Hour Chart

Will you look at that! It appears that Cable has been trading within a very wide range. With price testing at the top, will we see sellers start jumping in short again? I think we will, so I’m going to pull the trigger and sell this pair.

Here are my technical reasons:

1. A Doji formed yesterday at the top of the range
2. The top of the range lines up nicely with the 1.5900 major psychological level
3. The Stochastic is moving down after crossing over in the overbought

I have to be honest though. I’m a bit scared of the events that we have scheduled from the U.K. today.

First, there are the BOE MPC meeting minutes. Analysts are saying that it could reveal that the central bank is hesitant in providing the economy with more QE. MPC members Dale’s and Weale’s remarks about inflation possibly coming in higher than the bank’s forecasts might be shared by the rest of the committee members and could keep the bank from launching another stimulus package.

But then again, perhaps this has already been priced in and we could see a “buy the rumors, sell the news” move on GBP/USD. It’s possible. I mean, market participants may consider the headline CPI figure for February which printed at its lowest reading in over a year at 3.4%, and re-adjust their monetary policy expectations.

Secondly, Chancellor of the Exchequer George Osborne is scheduled to present his annual budget plan later today. Pip Diddy says that upward revisions on GDP forecasts from the Office for Budget Responsibility could spur the pound into a rally.

However, I think the current market sentiment is working in favor of my trade. We can’t deny the dollar’s strength these past couple of weeks, rallying on the back of positive fundamentals as well as risk aversion. I’m expecting to see it post gains again in today’s trading as concerns about China’s growth linger in the markets.

So based on my fundamental and technical reasons, I have decided to short Cable. I sold at market and I’m ultimately aiming for the bottom of the range. I’ve split my 1% risk into two positions so I can manage my trade easier. I’ve placed my stop at 1.6000, above the most recent high.

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

What do you think of my trade idea?



This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.