You'll remember last month we were in a EUR/GBP trade (see Jan. 13, '09) that went up, broke a channel line, then fell through the bottom channel line. That "head fake" move is not uncommon when trading channels. The AUD/USD did something similar yesterday. We lost 55 pips yesterday when we had a fake move up, but the pair immediately fell and broke the lower channel line. I entered at the end of the 2100 EST bar on the 16th at 0.6446. The pair fell pretty well and I moved to break even at +50 pips at about 0205 EST, set a 50 pip trailing stop and went to bed. When I got up a few hours later the pair was still trading below my stop, but had nearly taken me out at the front end of the 0500 hour bar. I tightened my stop to save 26 pips (I moved the stop to 0.6420, changed the trailer to 20 pips and went to work. We had one more small move down in the morning hours that moved my stop to 0.6400 and then the pair popped up a bit to take me out just after 1100 EST at my stop (while I was in meetings at work). Total trade was +46 pips. It was nice to get a bit back after being faked out on the buy side. In retrospect, I probably should have given the pair a bit more room to run. It had shown a proclivity to drop and did fall 50 or 60 pips after it stopped me out. I don't know. I usually like to be more conservative on my stops if I am not able to watch the trade. This week has been busy at work so my stops have been closer and it has worked against me some. Oh well.
Happy Trading!
Happy Trading!
