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:
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!
