Usually the first couple of hour in the afternoon early evening holds little activity, today is different. Most of the gains on the 3 open trades showed up after the 5pm est rollover. At the time of this post the Eur/Cad trade is now 123 pips up. The Eur/Usd trade is up 104 pips. The Eur/Aud trade is up 34 pips, remember that the Eur/Aud is also getting about $1 in interest to boot. All in all a fantastic couple of days. I am feeling rather exposed on the Euro. I like the fact that there are 3 different trades, in essence long the USD, long the AUD and long the CAD. I don’t like that I am short the Euro 3 times over. Spreading out sentiment of one currency across varied pairs is a good strategy if your intension is to reduce risk of a single trade but to trade longer term. To give ample opportunity to continued trend and possible reduce my short Eur exposure. I am going to tighten stops slightly, not too much like last time but a little. I will tighten my stops to 115 of the current price on the Eur/Cad and the Eur/Usd. I am leaving the Eur/Aud unchanged as it hasn’t moved very far and I am trading it for a longer term trade and interest payment as well.
Now, much to my surprise, oil finally closed below $58 for the first time since June of this year. Stubborn as I am, I am not convinced this is the break out. If it is a break out of the head and shoulders pattern that formed over nearly 5 months, we could expect oil to slide potentially down to $46 over the next 5 months. IF oil drops further tomorrow, I would also expect the Gbp/Usd to also complete a head and shoulders pattern and drop 800-900 pips potentially. That kind of move is possible If and only IF oil drops and IF the Gbp/Usd confirms a breakout of the head and shoulder (10% of target ~1.7300-ish).
Other setups are forming. More to come.
Thursday, November 10, 2005
Wednesday, November 09, 2005
Apology and Update
Apology and Update
I apologize for not updating this blog in the past 2 days, they have been busy. Let me give an update of my trades. The Eur/Cad retraced and touched my revised stop loss by 3 pips. I believe it is human nature to think that someone has it out for you, but I have it on good authority someone is out to get me. This person pushed a multiple trillion dollar market up just to clear out my stop. Obviously this is an absurd notion that someone was looking for my 2 mini contracts and purposely pushed the market to close me out of my trade. The reality is I placed my stop too close to where I saw a strong barrier. The big banks and large players must have also seen this barrier and tested it. My stop was just part of the casualties caused by the test. Enough said. Back to the trade. I saw that I had been taken out, still believing it was a break out and seeing the test and bounce off of resistance, I went short again. My entry this time was 1.4030, same original trade, second attempt. This means I gave up 20 pips from my previous trade, the cost of a stop set too tight. Lesson learned…,… I hope!
Next trade, the Eur/Usd closed below the 1.1850 target. I have been waiting for this break for months now. Short entry at 1.1796, target of 1.1596, stop of 100 pips, 2:1 RR ratio.
Now here is another trade I have been waiting for, in fact I had been waiting for over a month and had forgot to check it so I missed my entry by 9 pips. The Eur/Aud is a fairly consistant, slower moving pair. What I like about this pair in particular is the interest payment. Depending on the dealer, the Eur/Aud pays out about $1 a day on a mini and $10 a day on a full size account. Going back to the highs last December, the pair has dropped more than 1700 pips. Add on to that $365 in interest paid for leveraging one mini contract. Even if the pair netted 0 pips negative or positive and you sold this pair short, the trade would have ended up paying out 182.5% for the year in interest alone. DON’T GO BET THE FARM ON A CARRY TRADE (maybe bet the tractor). The Eur/Aud has bounced off of resistance and is coming down, hence the reason I sold the pair short (entry price 1.6023, stop loss 1.6173) Yesterdays close showed a MACD cross, a declining 5 period SMA after the aforementioned bounce off of resistance. It is my intent to hold this trade until the MACD and or CCI give me an exit signal, each day being paid interest and hopefully a few hundred pips to boot.
Last comment until the next post. There is a lot of uncertainty on the Usd/Cad. One of my colleagues and I have argued this. He says oil is dropping and the pair is rising and no one in the right mind would take this trade short. I am not one to be a contrarian but I do believe in commodities rising and I think this pair will probably turn around and go south here soon. Keep an eye out, yesterday provided a beautiful spinning top at a resistance level. Tomorrow is Sept Trade Balance for both the US and Canada. It could help break this pair out (my guess to the down side for this pair)
I apologize for not updating this blog in the past 2 days, they have been busy. Let me give an update of my trades. The Eur/Cad retraced and touched my revised stop loss by 3 pips. I believe it is human nature to think that someone has it out for you, but I have it on good authority someone is out to get me. This person pushed a multiple trillion dollar market up just to clear out my stop. Obviously this is an absurd notion that someone was looking for my 2 mini contracts and purposely pushed the market to close me out of my trade. The reality is I placed my stop too close to where I saw a strong barrier. The big banks and large players must have also seen this barrier and tested it. My stop was just part of the casualties caused by the test. Enough said. Back to the trade. I saw that I had been taken out, still believing it was a break out and seeing the test and bounce off of resistance, I went short again. My entry this time was 1.4030, same original trade, second attempt. This means I gave up 20 pips from my previous trade, the cost of a stop set too tight. Lesson learned…,… I hope!
Next trade, the Eur/Usd closed below the 1.1850 target. I have been waiting for this break for months now. Short entry at 1.1796, target of 1.1596, stop of 100 pips, 2:1 RR ratio.
Now here is another trade I have been waiting for, in fact I had been waiting for over a month and had forgot to check it so I missed my entry by 9 pips. The Eur/Aud is a fairly consistant, slower moving pair. What I like about this pair in particular is the interest payment. Depending on the dealer, the Eur/Aud pays out about $1 a day on a mini and $10 a day on a full size account. Going back to the highs last December, the pair has dropped more than 1700 pips. Add on to that $365 in interest paid for leveraging one mini contract. Even if the pair netted 0 pips negative or positive and you sold this pair short, the trade would have ended up paying out 182.5% for the year in interest alone. DON’T GO BET THE FARM ON A CARRY TRADE (maybe bet the tractor). The Eur/Aud has bounced off of resistance and is coming down, hence the reason I sold the pair short (entry price 1.6023, stop loss 1.6173) Yesterdays close showed a MACD cross, a declining 5 period SMA after the aforementioned bounce off of resistance. It is my intent to hold this trade until the MACD and or CCI give me an exit signal, each day being paid interest and hopefully a few hundred pips to boot.
Last comment until the next post. There is a lot of uncertainty on the Usd/Cad. One of my colleagues and I have argued this. He says oil is dropping and the pair is rising and no one in the right mind would take this trade short. I am not one to be a contrarian but I do believe in commodities rising and I think this pair will probably turn around and go south here soon. Keep an eye out, yesterday provided a beautiful spinning top at a resistance level. Tomorrow is Sept Trade Balance for both the US and Canada. It could help break this pair out (my guess to the down side for this pair)
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