Tuesday, March 31, 2009

Trade Update - EUR/CHF

This trade opened at the end of the 1000 EDT hour bar. I was in short at 1.5101. The pair went back up into the channel, then, starting with the 1500 EDT bar, started to fall. I moved to break even at +30 pips a bit after 1800 EDT. Not much to report since then. The trade is still open. I'll update as it progresses (or closes).


Happy Trading!

Trade Idea - EUR/CHF

The EUR/CHF pair has been trading in a fairly narrow channel for the last day and a half or so. Here is what the channel looks like:


If you look at the larger time frame, say the 4 hour chart you'll see that the pair has been trending down since the big jump up in mid-March. It's tough to say what this pair will do, but the good thing is we really don't care! If it closes above the top channel line its a buy, below and its a sell. Couldn't be simpler. I'm going with the move to break even at +30 pips again. I know what you are thinking, but this pair has not been very volatile lately and I don't want to get too fancy. I'll keep you posted.

Happy Trading!

Trade Result - AUD/USD +40

I wish I were still in this trade. Unfortunately, I was the victim of my own trading system on this one. I opened this trade at the end of the 2000 EDT bar at 0.6828. This was a close right on the channel line, but the momentum was clearly up so I entered the trade. If you'll remember from my previous post (click here to read that post), I wanted to move to break even at +30. Well, after opening, the trade quickly moved up to my break even line. At break even I put a 10 pip trailing stop in place. The pair rose up fairly well for the next few hours, started reversing in the early morning hours and took me out of the trade at about 0020 EDT for a +40 pip gain. Here is how the trade looked:

In retrospect, I don't think any permutation of my general trading rules would have kept me in this trade, so I am going to try to be happy with my +40 pips and work on the next trade. If you are still in the trade, good for you. I wish I were as well.

Happy Trading!

Monday, March 30, 2009

Trade Idea - AUD/USD

This pair has been consolidating all day in a 60 pip wide channel. See chart below:


I'll buy on a break above the upper channel line and sell on a break below the lower channel line. Usual rules apply, except that I'm going to make the initial move to break even with +30 pips of profit instead of 50 because of the lower volatility of this pair recently. I'll keep you posted.

Happy Trading!

Trade Result - USD/CHF +160

This trade opened on Friday morning and moved up pretty well until today with very little backsliding. The pair started hesitating about 1000 EDT and tried to hold on, but finally gave up enough pips to hit our stop at 1.1498 shortly after 1500 EDT. The total pip gain was +160. Here is what the trade looked like:


More to come later this week, I'm sure (if the markets cooperate).

Happy Trading!

Trade Update - USD/CHF Trade Still Going!

This trade is still open. After coming to within 2 pips of stopping us out Friday afternoon, the pair turned around and started moving up again. We have now saved +120 pips and our stop loss is at 1.1458. I'll keep you posted.

Happy Trading!

Friday, March 27, 2009

Trade Update - USD/CHF

This trade is going well (click here for original trade idea). The trade opened at the end of the 0500 EDT bar this morning at 1.1338. We moved to break even (+50 pips) just before 0700 EDT and I put a 20 pip trailer on it. As we stand now, we have saved +80 pips and our stop is at 1.1418. We'll take this as long as it wants to go and I'm prepared to hold it over the weekend if necessary. Below is the chart as we stand today.


More later this weekend.

Happy Trading!

EUR/USD Trade Results +108

The EUR/USD trade has been a wild ride. Like the EUR/CHF, we've had more than one run at this one as well. The first trade opened was what I call a "Finding Nemo Head Fake". The first traded opened on the buy side at the end of the 0745 EDT 15 minute bar (remember, this trade was based on 15 minute bars, not hour bars). I took a half position on the break of the inside channel line at 1.3605. The trade moved up and down a bit then made a move up breaking the outside channel lines and getting as high as 1.3640 before closing the bar at 1.3628, above the outside channel line. As we set our break even line at +30 pips, I moved the trade to break even and opened the second half of the trade. I set the break even for the second half of the trade at the first half break even (when I trade in half lots I don't like having multiple stops. It's too confusing). The pair turned right around and fell like a stone, stopping us out a bit after 0900 EDT at 1.3605 for a net loss of -12 pips.

The pair fell through the channel pretty quickly and opened on the short side at the end of the 1400 EDT bar at 1.3536 (I did not open this trade in two parts as the initial break of the inside channel was so close to the outside channel line. I decided to wait to see if it would break the outside channel). The pair again, moved quickly down and got to our +30 pip level and I moved to break even. Again, the pair did not move much lower, but our 10 pip trailing stop did get us a +10 pip gain on this trade. The pair moved up quickly after that and stopped us out at a bit after 2000 EDT.

But we were not yet done. This pair had not yet done what it needed to do. It was clear from all the aborted moves away from the channel that there was a move here to be made, but which way would it go? At the close of the 0400 EDT bar this morning I opened a half position on the sell side break of the inside channel at 1.3546. The pair continued to move down and I opened the second half of the trade at the close of the 0500 EDT bar at 1.1536. By 0515 EDT both trades were at break even and the pair was falling quickly. It fell through our profit target of 1.3430 by about 0605 EDT and, as I was taking my father to a doctor's appointment and had a limit order in, I was stopped out at that price for a total gain on the third trade of +111 pips (1/2 of the total for each half of the trade). Had I not had to be out of the house I might have continued to let the trade run down and picked up a few more pips, but alas, it was not to be. I'll be satisfied with a net +108 pips for the three trades it took to break this channel. Here is the final result looked like:


If there is a lesson here, it is that persistence is an important quality when trading. This pair was going to break out of the channel. The question was whether we had the patience to stick with it. This time, we did. And it paid off nicely.

Happy Trading!

Trade Result - EUR/CHF +0

This actually opened twice, moved to break even twice and fell back without scoring any pips twice! Sigh. The first trade opened at the close of the 0500 EDT bar yesterday. I was in at 1.5275. In my post on the EUR/USD trade idea yesterday morning, I moved the stop to break even after +25 pips because I was feeling odd about how slow the pair was moving. Now the EUR/CHF pair is not known for its volatility anyway, but still, I am a cautious trader. After not moving for a bit, the pair fell back and took us out at break even just before 0900 EDT. The pair fell back in the channel then and popped back out at the end of the 2100 EDT hour bar yesterday. I was in at 1.5270. I moved to break even this morning a bit after 0300 EDT and was stopped out at break even about half an hour ago. Two trades, no pips. That's going to happen. I'm going to keep an eye on this pair and perhaps readjust the channel over the weekend.

Happy Trading!

Thursday, March 26, 2009

Trade Idea - EUR/USD

The EUR/USD is consolidating in a less than 100 pip wide channel (perhaps waiting for the 0830 EDT GDP report). I like this pair today and think it will likely break out of the channel fairly soon. I'll buy on a break out on the 15 minute chart above 1.3618 and sell on a close below 1.3537. Note that this is the 15 minute chart, not the 1 hour chart. I'm doing this in an attempt to capitalize on a quick move up or down. The one thing that could keep me out of this trade is if we see a huge bar on the news (or for any other reason) that jumps up 50 or 60 pips. This is what the trade looks like:

You might even consider getting in a bit early. Note the narrower channel inside the wider channel. The danger here is that the pair could bounce off of the resistance of the larger channel. It might be worth a try though. I will probably put on a small position if this happens.

The green lines are the profit targets, set at logical support/resistance lines marked by previous, recent highs and lows. The rules that apply to this trade are: Move to break even at +30 pips, initial stop loss at other side of the channel, 10 pip trailing stop after break even. Let's see where it goes!

BTW, the EUR/CHF is open and looks to be close enough to the break even line that I'm going to move it there now. I'm off to work in a bit and don't want to miss that time (just in case it falls quickly). I'll keep you posted on this one.

Happy Trading!

Wednesday, March 25, 2009

Trade Idea - EUR/CHF

It does seem like I get on a currency pair and stick with it for a good bit of time. I was looking at March's trade results (on the right) and noticed that I've only traded 6 pairs this month, one of those 6 (GBP/CHF) I only traded once! I think its because these pairs tend to stay in a tradable zone until something big happens and that might encompass 2, 3 or even 4 trades. Anyway, this post is about the EUR/CHF. You can see from the chart below that it is in a very tight range and has been for better than a day.


As usual, I'll buy above the top of the channel and sell below the bottom of the channel (top-1.5258, bottom-1.5185). I'll move this trade to break even at +30 pips (not the usual +50 pips) because this pair has not had big pip moves recently and I want to get some pips banked somewhat quickly. I'll use the other side of the channel for the stop loss and have a 10 pip trailer on it when (or if) it gets to break even. I'll keep you posted.

Happy Trading!

Trade Idea - USD/CHF

Yes folks, it's back. As you can see below, this pair has been trading in a pretty well defined channel for a good bit (this is the hour chart, so it takes a lot of bars to make that long of a channel). As I've said before, this type of channel is not terribly unusual in a situation where a pair has made a big move (as this pair has - see left side of chart).


I would buy on a close above the channel and sell on a close below the channel. because of the width of the channel, I'll probably limit my stop to 100 pips, but you might also consider sticking to the "other side of the channel" technique and just trading fewer lots. I'll move to break even
at +50 pips and put a 20 pip trailing stop after that (probably). I'll keep you posted.

Happy Trading!

Trade Result - USD/CHF +0

This trade opened at the close of the 0900 EDT hour bar. I was a bit tardy getting in (typical work issues), and when I checked the pair, it had retraced somewhat and I was short the pair at 1.1220. On the issue of getting into a trade late, I will almost always take a trade if there was a bit of retracement or if the move looks to be continuing. If the retracement was 50 pips or if I was 100 pips late to the party, I might sit it out. Anyway, the pair moved down pretty quickly and hit +50 pips, where I moved to break even, then quickly went back up and took me out. Net zilch. Sigh. This pair continues to consolidate and when it does move, I expect it will be a strong one. I'll be posting another trade idea on this pair today.

Happy Trading!

Trade Result - EUR/CHF +35

We were taken out of this trade a few hours after the last update. The pair kept moving sideways, then, just before 0900 EDT, it hit our stop loss at 1.5247. Net +35 for the trade. I'll take it.

Trade Idea - USD/CHF

This pair is consolidating into a converging triangle. It has been consolidating for the last several days in a slightly upwards direction. This is not an unusual situation following a big move as the market tries to digest the change in price and decide what is next. I think it might be close to a break out of the triangle and want to be ready if it is.



I'll buy on a close of the hour bar above the upper line and sell on a close of the hour bar below the lower line. Usual rules for moving to break even and trailing stops. On the initial stop loss, I think I'll use 100 pips. That gives the pair some room to move, but not so much that if we are taken out quickly, it would be devastating. If the trade starts moving against us and closes above the opposite channel, I'll likely get out even if the stop has not yet been hit. I'll keep you posted.

Happy Trading!

Trade Update - EUR/CHF

This trade is still open. As I said yesterday, the first half of this trade opened on the sell side on Monday morning (EDT) at 1.5307. By yesterday morning, the first half of the trade had moved to break even and I put a 20 pip trailing stop on it. The second half of the trade opened on the sell side at the end of the 1500 EDT bar at 1.5222. At this point the stop on both trades is 1.5247, which would be +60 for the first half and -25 for the second half if it gets stopped out, but I'm still hopeful that the pair will continue its down move. It seems to be having a difficult time making it through the second support line and I'm not certain it will do so. But we are in positive pip territory at this point, so I'm not going to worry about it. I'll take what the market gives, and move on. I'll keep you posted.

Happy Trading!

Tuesday, March 24, 2009

Trade Result - EUR/GBP +80

This post actually will cover two trades as this traded opened, moved to break even, then stopped out, opened again, and made some pips. This pair really has "super pips" as each pip is worth about 1.4 regular (denominated in USD) pips. That's why we trade this pair with smaller stop losses and trailers. Anyway, the first trade opened yesterday at the close of the 0700 EDT hour bar at 0.9322. It quickly fell until we were +30, where I moved to break even. I put a 10 pip trailing stop on the trade and waited. The pair dropped only another 5-7 pips before reversing and taking us out at break even. It went back up into the channel and continued its sideways, slightly downward movement. At the end of the 2000 EDT bar, it broke through and closed below the channel again and we entered at 0.9312. After moving sideways for a few hours, the pair started to fall and I moved to break even at +30 pips a little before 0200 EDT this morning. It started moving back up at the beginning of the European session and almost hit our stop, but then turned and fell sharply going as low as 0.9202 before reversing and taking us out at 0.9232 for a +80 pip gain. All in all, not a bad trade. This pair has moved enough to stop considering it in a channel so we won't re-enter if it rises again inside the original channel. We'll wait patiently until it consolidates again, then take it for another ride.

On the EUR/CHF trade, the pair broke through the lower border of the narrow channel at the end of the 0800 EDT hour bar yesterday and we entered a half sized position at 1.5307. After flirting with the top of the channel (and our break even point), it fell and we have moved to break even and put a +20 pip trailing stop on. I'll update more as this trade progresses.

Happy Trading!

Monday, March 23, 2009

Trade Ideas - EUR/CHF and EUR/GBP

This pair is consolidating again in a narrow trading range. You'll remember from last week that this pair tried to break out of the wider channel, only to pull back inside. We made a few pips, but it was mostly an aborted trade. We'll hope for better this time. The pair has been trading in about a 60 pip channel for the last day and a half or so. I'd look to buy above 1.5380 and sell below 1.5316 (that is the narrow channel). The wider channel is on the high side 1.5450 and on the low side 1.5226. I'll do the same thing I did last time, initiating a half sized position upon the close above or below the inside channel and then a second half upon the close above or below the wider channel. Same rules and profit targets as last time (see last Thursday's post.)

I'm also watching the EUR/GBP. If you look at it you'll see that it has been trading in about an 80 pip channel, in a slightly downward direction, since the wee hours of Thursday morning (Eastern time). My channel lines are drawn on the high side using the high of the 0200 EDT hour bar on 3.19 and the high of the 1800 hour bar on 3.22. On the low side it is drawn on the low of the 0700 EDT hour bar on 3.19 and the low of the 1200 EDT hour bar on 3.20. (If I ever figure out how to put art up on this blog, it will simplify my channel descriptions immensely). I'll buy on a close above the line and sell on a close below the line. I'll use a 30 pip target for move to break even and then put a trailing stop on to guard my profits. I'll keep you posted!

Happy Trading!

Sunday, March 22, 2009

Price Theory - Reprise

Below is the text of a post I put up a few months ago. A discussion I was having at work with a colleague about indicators prompted me to think about this issue again. I thought putting this up again would be useful. I plan to do more on price as the ultimate indicator at a later date, but this will warm you up.

"If you've read this blog before, then you know that I am a lawyer by profession, and a trader by avocation. As a lawyer, I've had countless opportunities to see juries in action. You might wonder what juries have to do with trading. Stay with me and I'll explain. Time and time again I've seen a group of 6 or 12 average men and women listen to evidence in a trial, sometimes extremely complex, sometimes simple, and come to the right conclusion. Now its not perfect and I'm sure we can all come up with a few times when the jury system was compromised, but all in all, juries work. The group mind appears to be very capable to sifting through vast amounts of complex information and testimony, throwing out the things that really don't matter, and coming to correct conclusions. It really is fascinating.

Markets run in a very similar way. You have millions of trades every day and each trade is a vote on whether the stock, bond, commodity or currency traded is worth more or less than it was just moments ago. In a very real way, the market is a jury deciding the guilt or innocence (read strength or weakness) in whatever is being traded. This means that the price of any liquid currency or stock is always exactly what it should be (the crux of the Efficient Market Hypothesis) and is perfect based on available information. What makes markets move then? That is a question which could (and probably has) given rise to a vast amount of academic research. My simplistic thought is that markets are living things. There is a constant in-flow of new information that the market reacts to. These reactions are, in very general an simple terms, what move the market.

Why is this important? For many reasons, but what got me thinking about it is that I've started working with MetaTrader4 and am playing with the hundreds of indicators which have been created for it. With very few exceptions, these indicators are simply processed indications of past and present price movements. It seems funny to me that we use processed price to try to divine future prices. I guess I'm more of a purist when it comes to indicators. If price is what we are going to use to try to guess what the prices in the future might be, then any permutation that takes away from the purity of price itself, has to be less helpful. Price tells us all we need to know. Are prices trending? Look at daily and weekly charts. If you can't see a trend, there is not one. Will prices break up or down? Look at how prices have trended, draw support and resistance lines, and wait and see. Indicators like Moving Averages, RSI and MACD only tell you what price has done, not what it will do. They have uses, but truly only in telling us where current price stands compared to historical price. To think otherwise is merely buying in to what brokers, system sellers and others who are only interested in what they can get you to buy, are trying to get you to do.

Want to be different? Want to do better than you've been doing trading with inferior or old information? Here's the secret: Think for yourself. Use price and think for yourself. It really is as simple as that.

Until next time - Happy Trading."

Trade Result - EUR/CHF +17

If you read Friday morning's post you know that the first half of this trade opened Thursday afternoon at the end of the 1300 hour bar at 1.5341. As I set out in my last post, this trade moved down pretty good and, by the time of the post I' d moved to break even, put a 20 pip trailer on and saved 20 pips. The second half of the trade opened at the end of the 0900 EDT hour bar at 1.5255. The pair continued down pretty well for the next half an hour and came so close to getting to +30 pips (29.5 pips) that I moved this half of the trade to the same stop, with the same trailer, as the first half. Unfortunately, that was the end of the move on Friday, and the pair reversed and took out our stop at +60 for the first half and -26 for the second half. As we did this trade in half units, our total for the trade is +17. Oh well. We'll keep our eye on this pair to see if it stays in the channel for a time or, in the alternative, busts out at the top. I'll keep you posted.

Happy Trading!

Friday, March 20, 2009

Trade Update - EUR/CHF

This trade opened on the sell side yesterday (March 19) at the end of the 1300 EDT bar at 1.5341 when it closed below the inside channel (see Trade Idea post from yesterday morning). As I indicated in yesterday's post, I opened a 1/2 sized position when the the pair closed below the lower limit of the inside channel, and will open the second 1/2 if the pair breaks through and closes below the lower limit of the outside channel. In this first 1/2, after some sideways movement the pair started toward the wider, outside channel, at about 0500 EDT this morning. I've moved this part of the trade to break even and have a 20 pip trailing stop on it now. So far we've saved about 20 pips of profit on this 1/2 of the trade. It is flirting with the resistance at 1.5264 but looks like it might successfully break through. If it closes below the wider channel I'll open the other half of the trade and combine both halves if the second part gets to +30 pips of profit. I'll keep you posted!

Happy Trading!

Thursday, March 19, 2009

Trade Idea - EUR/CHF

This pair has been trading in a wide channel (185 pips or so) for the better part of a week and a narrow channel (60 pips or so) since yesterday afternoon. Those of you have been reading for a while are aware that I like to see at least 10-12 hour bars defining a channel and the more you have, the better the break out (generally speaking). In this case, I'd like to enter half a position if the pair breaks out of the narrow channel and add another half if it breaks through the wider channel. I'll treat each trade separately, with their own stop losses, but if it breaks through the wider channel and gets +30 pips (a bit less than I'd usually require), I'll combine them and move both to break even based on the wider channel and use one trailing stop for both. I hope that is clear. The narrow channel is defined as 1.5409 on the high side and 1.5346 on the low side. The wider channel is defined as 1.5450 on the high side and 1.5264 on the low side. I think the EUR/USD is also forming a nice channel, but I'm not quite ready to commit. I'll just watch it for now. I'll keep you posted.

Happy Trading!

Wednesday, March 18, 2009

Trade Result - USD/CHF +375

This one moved fast and furious in two big moves and gave us a huge amount of pips. First the back story. We opened this as a sell trade on March 17 at the close of the 0600 EDT one hour bar at 1.1816 (see earlier post). The pair did not move much yesterday, but today, beginning with the 0500 bar, it started to fall. And fall it did, like a rock. We moved to break even at +50 pips (1.1766) just before 0600 EDT this morning. It fell pretty steadily until just after 1000 EDT. By then our stop was already saving 125 pips of profit. The pair moved sideways for a few hours, coming close to stopping us out (which I would not have minded, I mean, 125 pips is nothing to sneeze at), then it dropped like a stone starting at about 1415 EDT. In less than 30 minutes it fell another 200 pips (thank you Ben Bernanke), then retraced enough to knock us out at 1.1441 for a 375 pip gain. Nothing tastes as good as sweet success! I've got a busy day tomorrow so I may not get a chance to do much, but I hope update where things are with some of the other trades I was watching (got a few on the GBP/JPY today too) by this time tomorrow.

Happy Trading!

Tuesday, March 17, 2009

Brief Update - What I'm Watching Right Now

Don't have a lot of time right now but I wanted to note for those who may be following this evening (my time anyway), that a few pairs are forming nice channels and you should be on the look for break outs. Specifically, I'm watching the AUD/USD, CHF/JPY, EUR/CHF (I like this set up a lot), and the GBP/JPY. All of them look like they could have good break outs. Keep your eyes open. I'll report more tomorrow (work permitting).

Happy Trading!

Trade Result - EUR/USD -71 (two trades)

This trade opened short at the close of the 1800 EDT bar. We sold the pair at 1.2847 after a pretty strong downward bar. The pair turned on the next bar and went back into the channel and after going back and forth a bit hit our stop a little after 0400 EDT for a -111 loss. The uptrend continued and the pair closed above the channel at the end of the 0400 EDT bar, and as I was up anyway, I entered the trade at 1.2982. This had the looks of the type of head fake that is not uncommon in channel trading where a pair makes a quick move in one direction, only to reverse and go in the other direction for a couple hundred pips. This, however, was not one of those times. The trade opened long and moved up pretty well. The trade moved to break even at 1.3032 at about 0615 at which time I put a 10 pip trailer on. It continued up hitting a high of 1.3072 just after 0820 EDT. The pair moved back down pretty quickly after hitting that intra-day high and hit our stop at 1.3012 at a bit after 1000 EDT for a +40 pip gain on the long side. Total for this pair on these two trades was -71.

The USD/CHF trade opened yesterday at the close of the 0600 bar. I was in short at 1.1816. The pair hasn't done much so far. I'll keep an eye on it and report when there is more information.

Happy Trading!

Sunday, March 15, 2009

Trade Ideas - EUR/USD and USD/CHF

I know what you are thinking: "What, not the CAD, or the GBP/JPY"? Yes, its true, sometimes I trade other pairs. These two are in nice horizontal channels and, while the rule does not always hold true (see last USD/CAD result), the longer a pair trades in a channel, the greater the break usually is. Both of these pairs have been trading in a pretty tight (100 pip or so) channel since mid-day on Thursday (March 12). On the EUR/USD I'm looking to buy above 1.2957 and sell below 1.2860. On the USD/CHF I'm looking to buy above 1.1934 and sell below 1.1834. Again, the usual rules apply (the usual rules are: at +50 pips move to break even and put a trailing stop on; stop loss set at other side of the channel). As for profit targets, there seems to be some support for the EUR/USD, on the short side, at about 1.2730 and some resistance, on the long side, at both 1.3100 and 1.3200. On the USD/CHF, for the long side I'd look for 1.2250, and on the short side it could go as low as 1.1500. We'll see how this goes. I'll let you know if anything happens.

Happy Trading!

Trade Result - USD/CAD -69

This one started well, then ended with a bang (the kind that gets blood on you). This opened on Friday (March 13) after the close of the 0700 EDT bar at 1.2819. Unfortunately, that's all it did . . . open. The pair fell immediately during the next hour and stopped me out at 1.2750 for a loss of 69 pips. I did not open a trade on the sell side as the quick fall indicated to me that there was something going on in the market that I did not understand and did not have time to find out (as I was at work). As a rule, when I think there is something I'm not understanding in the market, I stay out. I don't need to understand everything (no one could), but sometimes a currency moves big for reasons that are not readily understandable. In those cases, I stay out.

I hope everyone had a great weekend. Happy Trading!

Friday, March 13, 2009

Trade Idea - USD/CAD

Again with the Loonie you say? I say, as long as the set up is right, who cares what pair it is? The Dollar/Canadian pair has traded in a 60 pip, or so, horizontal range for the last day or so. There was one spike down (the 0500 EDT bar this morning), but it did not close below the channel so I am going to ignore it. I do that sometimes if the spike is recent and does not close below the channel line. In this case, I'm looking to buy on a close of the one hour bar above 1.2810 or sell on a close below 1.2750. The usual rules apply (50 pip move to break even, 10 pip trailer thereafter, stop on the other side of the channel). I expect this pair to move back up to the 1.2900+ range as it has been doing for the last several days, but the 800 sma is also calling it to go down, so we'll just have to see what it does. We don't care. Either way works. I'll keep you posted.

Happy Trading!

Thursday, March 12, 2009

A Note About the EUR/GBP and the GBP/CHF - Two Boats Missed

For those who were watching in the wee hours of Monday morning (March 9) you saw the EUR/GBP break through its 800 sma at about 0300 EDT. Unfortunately, I was not paying attention and missed the trade (thus, no addition to the totals on the right). Had I been paying attention, I would have made about 150-170 pips on this trade (and these are super pips, denominated in Euros, each worth about 1.5 times the average USD denominated pip). The pair is in a period of consolidation now, moving slowly upward, but within a narrowly defined range. I'll be watching to see if something shapes up with this pair, and hopefully, will not miss the boat this time.

And while we are on the "boats missed" topic, the big move in the Swiss pairs today was also missed by yours truly. Not for any reason other than that I am sick and trying to work and trade when I'm on cold drugs is something I try to avoid. I only found out about the move when a reader pointed it out to me. If you look at the GBP/CHF hour chart prior to the move you'll see the type of channel there that I usually like to trade. There were several hundred pips there which did not get taken (by me, at least - hopefully some of you were watching and got in). No bad feelings here though, while the EUR/GBP is one I should have caught, "no trading while sick" is one of my rules. Plus, in the Forex market there is always another opportunity right around the corner.

Happy Trading!

Tuesday, March 10, 2009

Trade Result - GBP/JPY +50

This trade opened when the pair closed below a long term resistance line yesterday morning about 0540 EDT (see the post titled "What I'm Watching Now" from last Sunday). I was short the pair at 137.77. Before 0900 the pair had moved the 100 pips to break even (my standard for this pair because it is so volatile) and moved my stop to +50 (as you know from prior posts, I put a 50 pip trailer on this pair usually after moving to break even). Then it came back and moved up through my stop quickly, taking me out just before the close of the 0900 EDT bar. I'll take +50 pips any day, but I do think this pair has more to give and I'll be watching it.

Happy Trading!

Trade Result - USD/CAD +150

When this trade closed above its support (see last entry), I was watching to see if that close would be confirmed by a strong up move. You've got to remember that everyone who trades Forex sees the same prices that you do. So the world was watching when this pair broke above its long term resistance line. The question was, could it sustain the move? The vote was clearly "no" as the pair immediately fell back over the next 2 hours. I was watching between 1100 and 1200 EDT as the pair looked like it might test the resistance line again, but started to fail. I put a sell limit in at 1.2950 and waited.

The trade opened at about 1220 EDT at my sell limit of 1.2950. I put my stop above the recent high at 1.3070. The trade went sideways for a few hours then about 2300 EDT started to fall. When I got up at 0300 EDT (this morning) to check my trades, I moved to break even as the pair had hit 1.2900 (+50 pips) an hour or so earlier and put a 50 pip trailer on it (wanting to give it room to find the 800 sma). The pair looked like it might take me out at break even, then continued its fall. I was finally stopped out a couple of hours ago at 1.2800 for a +150 pip gain. While it did not find the 800 sma (and I still think it will), it did ok for me over the last few days.

Happy Trading!

Trade Result - USD/CAD -100

Sorry this update is behind schedule. I've been down with a cold for the last few days and am a couple of posts behind. I'll try to catch up today.

The sell limit on this trade was hit about 0500 EDT on Monday morning. I was short at 1.2900. Without any delay, the pair rose to take me out at my stop of 1.3000 just before 0900 EDT for a -100 pip loss. The pair closed above the resistance line for the first time in a good long while, then fell back below. I entered the trade again, but that's the next post.

Happy Trading!

Sunday, March 8, 2009

What I'm Watching Now

There are a couple of things going on in the markets I'm watching. Clearly, in the Forex markets, I'm watching the USD/CAD pair. I've written about them ad naseum over the last few days. Also, I'm watching the GPY/JPY. I'm expecting it to fall below support at some point soon. If it goes, it will go big, and fast. I'm hoping to be a) awake and b) ready to take the trade opportunity when it comes. I'm watching the CHF/JPY as well. It is trending upward and narrowing as it goes. It will either break higher or lower and I'll be watching it to see what happens. I'm watching he EUR/GBP as it bounces off of its 800 sma (hour chart). This pair fell through the 800 sma about a month or so ago and has bounced off of it once already. It will either break through and go north, or it will bounce off of it again and fall back a hundred pips. The EUR/USD also interests me. It is a few hundred pips from a significant low (1.2329, its low since April of '06). If it breaches that low, it could fall down to the 1.1600 level (last seen in 2005), or even lower.

I've also got an eye on the stock market. As the Dow flirts with 6500 and the NASDAQ hits 12 year lows there are two modes I see folks in. They either panic and sell (or freeze), or they seize the opportunities and either buy at historic lows, or short weak issues to squeeze the last few drops of blood out of them. I've been contemplating breaking out my put selling strategy again. As otherwise strong companies get hit hard by market conditions (MMM, INTC, JPM, BBT, GE, USU, just to name a few) there is an opportunity to capitalize on the fear by selling puts (options obligating myself to purchase a set amount of stock at a set price by some future date) and reaping a hefty premium in the process. Put selling is not for the faint of heart, or for those brand new to options (I'd recommend selling covered calls if you are interested in breaking into this area of the market) but it can be very profitable. I only sell puts on stocks I would not mind owning at prices I would not mind paying. A good starter book on this strategy is this book by Ronald Groenke. These days there is money to be made on this. I will do more in the future on how I look at put and call selling. It's done well for me.

On a final note, I'm also looking at energy trusts. They were big a year or so ago when oil was $150/bbl., but prices have waned since then (in some cases substantially - see AAV for an example). These trusts pay out monthly dividend income from their royalties. The regular income is nice and this looks like a good time for folks who are going to want regular monthly income in the coming years to get in at a good price. Does anyone really think $40/bbl. oil is here to stay?

Happy Trading!

Trade Result - USD/CAD +0

This trade was not very exciting. This trade opened at my sell limit price of 1.2875 about 1050 EST on Friday (March 6). The trade started moving in the right direction almost immediately and we moved the trade to break even about 1210 EST. Then it just went the other way and stopped us out at break even at about 1320. I'm sticking with this one for another cycle or two. I'm moving my sell limit back to 1.2900 with a stop at 1.3000. All other criteria will be kept the same. I'll keep you posted.

Happy Trading!

Friday, March 6, 2009

Trade Result - USD/CAD Part 2 +50

This pair still refuses to fall to the 800 sma, but it is still giving us some love. We opened this trade again (see yesterday's Results post) at 1.2900 when our sell limit order was hit at about 1420 EST. We moved to break even just before 2000 EST last night and I put a 50 pip trailing stop loss on. We were still in the trade when I went to bed at about 2200. I got up to check the markets about 0230 and the pair was just hitting the 1.2800 mark, moving our stop loss to +50 pips. When I got up this morning, I found that we'd been stopped out just before 0420 for a total gain on this trade of +50 pips. While I will take that (and be glad of it), I am a bit disappointed that the pair has not moved back to the 800 sma yet.

I still think this pair will move to the 800. It's just toying with us for the time being. I'll put another sell limit in on this trade, but this time at 1.2875 (this pair seems to be making lower highs on its way down). Same rules: 50 pip move to break even, 50 pip trailer. My stop will be at 1.2975. I'll keep you posted.

Happy Trading!

Thursday, March 5, 2009

Trade Result - USD/CAD Part 1 +100

After I posted this idea yesterday, I put a sell limit order in at 1.2900, with my stop at 1.3000. My sell was just barely hit at just before 0830 EST on Wednesday morning. I moved my stop to break even at about 0900 EST and put a 50 pip trailer on it. I wanted to give this pair some room to run as I believe it will ultimately hit the 800 sma and that line was at about 1.2460. I did not want to get stopped out prematurely. The pair fell pretty well, had a bit of a reversal and ultimately stopped me out at 1.2800 at about 0450 EST this morning (the 5th). I had the trade on auto-pilot and was not really watching it closely after the move to break even. It looks like the move just ran out of steam early this morning and just couldn't keep falling. When I got up this morning I reloaded the sell limit and was put back in the trade just before lunch today. I am short the pair at 1.2900 again with my stop set at 1.3000. I'll keep you posted on how it goes.

Happy Trading!

Wednesday, March 4, 2009

Trade Idea - USD/CAD

The Dollar/Canadian pair is at an interesting place. It is flirting with a resistance line which it has been respecting for the last 6 months (currently about 1.2975). Also, the 800 sma is moving in the direction of the price. At the moment, the pair is about 400+ pips from the 800 sma. I think one of two things is going to happen. This pair is either going to break through the resistance line and shoot up (strengthening the US Dollar against the Canadian Dollar) or the pair is going to fall and bounce off of the 800 sma (as it has been doing regularly for the last six months). I am contemplating a trade where I put a sell order at 1.2900 or 1.2950 and wait for the pair to rebound to that price, then try to ride it down to the 800 sma. I'd put a stop loss maybe 30 pips on the other side of the resistance line. I'll keep you posted on how it goes.

Happy Trading!

Trade Result - GBP/CHF +45

This trade opened last night, depending on how you entered either at around 2200 EST or at about 0300 EST (this morning). I opted to take half a position at the break of the narrow channel and then half if it broke the wider channel. It broke both. Here's how it happened. The pair broke through the narrow channel at the end of the 2100 bar. I opened half a position at 1.6567. I got up last night at 0230 EST to check the position and the pair was just getting to my +30 pip break even point. I moved to break even then watched as the close of the 0200 EST closed beyond the wider channel. I opened the second half of my position at 1.6613. The pair moved up pretty well for the next few minutes hitting a high of 1.6670 just before 0315 EST. Then, the bottom fell out. Within the next half an hour both of my trailing stops were hit and I went back to bed. The total was +70 pips for my early half position and +20 pips for the second half. I've averaged them for the purposes of record keeping and am calling it +45 pips for the total trade. I think the Pound pairs have more movement in them and will be watching them for the next day or so. I'll keep you posted.

Happy Trading!

Tuesday, March 3, 2009

Trade Idea - GBP Pairs

If you've been watching the Pound pairs for the last day or so you are seeing a lot of horizontal movement. The market seems to be waiting to see what the BOE rate decision is going to be on Thursday at 0700 EST (1200 GMT). The common wisdom of price theory would say that the overwhelming opinion that the BOE is going to cut rates would already be priced into the Pound pairs, but history would indicate otherwise. This article on the issue (click here) shows that the GBP has moved significantly upon release of the rate decision in both January and February of this year, even though the decision was exactly what was expected. The bottom line is that we can expect some movement on Thursday morning (my time).

That having been said, I like the look of the GBP/CHF the best. It is moving very nicely in a horizontal channel and has been for the last day and a half or so. I'd look to buy at a close on the hour bar above 1.6603, and sell on the same time frame below 1.6439. My stops will go at the opposite channel lines as usual. Because of the potential for unusual moves because of the rate decision, I'm moving to break even at +30 and putting a 10 pip trailer on it after that. I'm not looking to make a killing, just a few solid pips.

An alternate way to trade this move would be to draw the channel lines a bit inside the lines I've given above. If you look at the hour bars for the last 30 hours or so you'll see that the price has not closed above 1.6558 or below 1.6458 in that period (a 64 pip narrower channel). The prices have moved above and below those levels, but not closed higher or lower. One could take the trade if the pair closed above or below that channel, but it is riskier. You could also take half your trade on closing outside the narrow channel and half above the wider channel. There are many ways to play this game, the secret is to choose your method, don't risk too much, and be consistent. I'll keep you posted.

Happy Trading!

Trade Result - GBP/JPY +20

Sorry for the late result post. I've been traveling in western Virginia the last few days and the hotel I was staying in had their internet connection go out. You don't know how much you rely on it until its ripped away. Anyway, this trade opened about half an hour or so following my post (this is a very volatile pair) and I was short at 137.14. Remember that I felt a bit funny about how this pair was acting so I was going to move the stop loss to break even at +50 pips. We hit that point about 0715 EST on the 2nd. I put a 10 pip trailer on it at that point (because I was feeling odd about this move, I wanted to protect what I could get) and the pair fell to 136.42 during the 0700 EST bar (while I was going to work) and we picked up +20 pips before there was a quick reversal and we were stopped out at 136.94. You'll note that the pair fell again and went as low as 135.60 before turning northward again. Had I stuck to my 100 pip break even point on this trade I would have made about 40 pips (with the usual 20 pip trailer). We made less, but we risked less, which is how it should be.

I watching this pair as it travels along a fairly well established trend line. We may take another trade here again soon. I'll keep you posted.

Happy Trading!

Monday, March 2, 2009

Trade Idea - GBP/JPY

I do have my favorite pairs, and the Pound/Yen is one of them. I'm watching the pair approach a trend line this morning and if it breaks through on the hour chart, I'm going to sell. The low of the 0300 EST bar on 2-20-09 and the low of the 0800 bar on 2-27-09 are the two points of the trend line. I'm looking for a close below this line. If it closes below that line, I'll sell the pair. One of the trend lines we used as a target for the last Pound/Yen trade is also useful here. It is currently about 100 pips below our entry line. If it closes below that line, I'm going to add to my position. It may bounce off of that line as well so I'm going to go to break even at +50 pips on this trade (usually I would wait for a +100 move before break even). My stop loss would go above the 139.50 level maybe 139.70. I'm looking for the pair to go down as far as 131.00 (if we get lucky). I'll keep you posted.

Happy Trading!