EURUSD
By Laetitia Vaval | October 11, 2007
I just entered a long EURUSD position at 1.4215. I realize this is probably not an ideal entry point I realize, but I’ve been away for a while and didn’t get a chance to trade before. The Euro tested an all-time high at 1.4280 almost 2 weeks ago and has now been in a steady uptrend for the past 3 days. It seems that it is either about to test this all-time again to form a double top or trade past this level and toward 1.43.
In the case that a double top forms, my upside is: 1.4280-1.42153 = 65pips. I must therefore place my stop about 35 pips below my entry point (1.4215) at 1.4180 in order to have a 2:1 risk reward ratio. If the Euro breaks that all-time high then it could possibly trade up to 1.43 and higher and in that case.
U.S. retail sales are being released tomorrow morning at 8:30, and it will affect my trade if it differs from expectations as the EURUSD is the primary currency pair affected. I’ll need to closely monitor the trade during the release since there will be a lot of volatility and my stop might be too tight. will update after the release.
Tags: eurusd, retail sales, wall street warriors
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Trading the Fed Rate Cut Announcement
By Laetitia Vaval | September 19, 2007
Yesterday was pretty exciting since the Fed was set to announce whether they were cutting interests rates and if yes, by how much (25bps or 50bps). Opinions were mainly divided between a 25bp or a 50 bp rate cut. Before, the announcement at 2:15, I prepped myself by planning out the trades I would place for each scenario.
A 25bps cut would have been bullish for the dollar whereas a 50bps would have been bearish. I decided to trade the currencies I was most familiar with — that is the EURUSD and the GBPUSD.
At 2:15pm EST, the Fed announced that they were in fact cutting rates by half a point. The reaction in the US Dollar was immediate as you can see on the 5-minute charts above (EURUSD and GBPUSD). In the case of a 50 bp cut, my plan was to get long the Euro and the Pound as soon as possible right after the announcement.
The morning of the announcement I got long the EURUSD at 1.38818. The pair did not move much until the announcement in the afternoon. Within 5 mins the EUR jumped to 1.3965 - more than an 80pips. However, soon after the pair reversed and traded down. I got out of my position at the top of the wick of the next 5-minute (red) candle at 1.3936. I made $542 on that trade. OF course, the reversal was only temporary and a few minutes later the Euro continued trading up and at 14:40 hit 1.3980, and a few hours later hit a high of 1.3987. Had i held onto my trade longer my profits could have been doubled.
My second trade involved the GBPUSD. I also got long the pound in light of the half point rate cut. I actually ended up buying 2 lots of the GBP. I bought lot #1 at 2.00419 and sold it for 2.00670 ( a 25.1 pip gain). I bought lot #2 at 2.00528 and sold it at 2.00650. Looking at the 5 minute chart from yesterday, it is easy to see that I only captured a fraction of the profits that could have been made on this explosive upmove. As you can tell from the 2nd chart above, the GBP kept trading up to hit a high of 2.0150 about 35 minutes later. Same problem here as in the EURUSD, and many of my previous trades as you can see in my past postings — I exit my trades way to early and then they keep trading my favor.
About 15 minutes after the announcement I placed a few smaller trades on the USDCAD (got long at 1.0178) and re-entered a long position in the EURUSD at 1.3960. I exited those trades a few pips higher and made some minor profits — about $100.
I really enjoy trading the news. It’s very fast paced and there is a potential to make a lot of money. However, unfortunately market moving news like the fed rate cut do not happen everyday and in the meantime, I have to make some trades in the “slower” in between phases. Today, I’m going to focus on trying to find a few range-trading currencies.
Will update on that this afternoon.
Tags: dollar, dow, eurusd, forex, forextrading, pips, rate cut, trades, wall street warrior
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US Retail Sales
By Laetitia Vaval | September 14, 2007
As I wrote yesterday, I had a short position in the USDJPY when I left the office. At 12:30 GMT, the August US Advance Retail Sales came out at 0.3% ( vs. 0.5% expected). Although this number came out slightly below expectations, the real disappointment came from US Retail Sales LESS Autos (-0.4% vs. 0.2% expected). This number indicates that US consumers are spending less money and is reflected on the USDJPY chart (above) within minutes of its release. I was short from 115.320 kept my position overnight. The USD weakened this morning in light of the disappointing Retail Sales release and the USDJPY dropped to a low of 114.35. I decided to buy back at 114.51 as I was starting to see a reversal and the beginning of a new uptrend. I made a 81pip profit.
I am still holding onto the EURUSD position that I bought yesterday at 1.3894. As I write, it is trading at 1.385.
Tags: currency trading, eurusd, forex, forextrading, jpy, retail sales, wall street warrior
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Trading when economic data is released
By Laetitia Vaval | September 13, 2007
Today, I’m going to write a little bit about having a position open when major economic data is released. As I wrote on my previous thread, I opened a long position in the GBPUSD yesterday and decided to keep my position overnight. By doing so I made a major mistake: I didn’t check the economic calendar on DailyFx and therefore was not aware that the UK was releasing its RICS House Price Balance for the month of August at 23:01GMT. This indicator measures the costs of homes in the U.K. and was estimated to come out at 10.0%. A rise in house prices usually reflects an overall strong housing market and strong economy. However, this number came out at -1.8% much below expectations and even showed a decrease in the cost of homes — an indicator of an overall weak economy.
Of course the GBPUSD reacted to this disapointing news and dipped about 30pips below the level it was trading at before the release. Having placed my stop at 2.027, I was stopped out at 19:34 EST. The fact that I was not aware of this important overnight news release didn’t allow me to adjust my stop price since I should have foreshadowed that the GBPUSD would be fluctuating greatly following the release. So as I wrote earlier, I was stopped out at 2.027 — a 46pip loss. Of course, the pound traded back up slowly and peaked at 2.03440 mid-day today.
This mistake is in some way very valuable because it taught me to check which indicators will be released overnight, the consequences they may have on the positions I am holding and how to make the necessary adjustements to avoid big losses.
Today, I am trading the EURUSD and the USDJPY, and have to take into consideration that major economic releases will be coming out tonight regarding both the US and Japan. At 8:30 EST tomorrow morning, Advance Retail Sales - a major market moving indicator — will be released and could trigger a rather large move for the EURUSD if not in line with the 0.5% expectations for August. Japan will also be releasing some relatively important data overnight regarding Industrial Production — which could have a market moving impact on the USDJPY.
I’m going to hold my EURUSD position overnight, as I am looking to keep it for a longer period of time. I’m going to make sure I place a large enough stop, so that I do not get stopped out of my position if the US economic numbers come out better than expected. I’m going to place my stop at 1.3777 which was a good support level on 09/10/07.
Tags: dailyfx, dow, economic release, eurusd, gbp, housing market, pips, retail sales, wall street warriors
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First Trades
By Laetitia Vaval | September 11, 2007
Tuesday, September 11, 2007
I’ve just set up my new demo trading account and here I am with $50,000 (fake) dollars at my disposal to buy or sell a currency pair that I believe will move in the direction my combination of technical and fundamental analysis will have predicted.
The first currency pair i looked at, of course, was the EURUSD. The Euro was reaching a record high at around 10:30AM 1.38494 as you can see on the chart above.
I had seen an important resistance level @ 1.3837 and got in as soon as that resistance level was crossed. I got long at 1.3841 (where the top line is drawn). The Euro peaked at 1.3849 and traded back down to its previous levels. I sold my position at 1.3832. A 9 pip loss ($90).
Having traded previously, I can easily identify some of the mistakes I made on this trade. First, I did not clearly identify my Risk vs. Reward (and with that my Stop and my Limit). My upside was difficult to estimate since I was expecting a breakthrough all-time highs. My downside however was about 19 pips since the next closest support level can be found at 1.3822 (the bottom line on the chart). I’ve learned that a trader — especially a beginner should never enter a trade without having first identified his risk vs. reward. Had I followed this rule, I should have expecting to see at least a 40 pip upmove - since my downside was 19.
Although i’m not an expert, I believe that a 40pip upmove would have been quite important and difficult to achieve without some sort of news breaking event. I’ve traded equities before and although false breakouts exit, they seem more rare than in the Foreign Exchange market. I’m used to seeing stocks skyrocket after breaking all time highs. This didnt happen with the EURUSD — i was just the victim of a false breakout.
Another mistake I made in one of my other trades was that I got shaken out too quickly. I entered a position, the currency pair did not immediately move the way I had expected it to, and i quickly closed the position by fear of loosing too much. Of course, immediately after I got out of the position, the pair made a reversal and started moving the way my analysis had predicted. That’s most likely an old habit left from day (short-term) trading. I’m not used to waiting hours (and sometimes days) to see the results.
In my EURUSD trade, you can see that I exited my position before my stop was hit. Although it was for the best since the currency kept trading down from there, it probably shows a lack of discipline by not respecting the levels i had previously set.
For this trade i did not factor in any sort of fundamental analysis as I was looking to enter a short term position and trade a breakout.
Tags: demo trading, dollar, dow, eurusd, forex, forextrading, pips, trades, wall street warrior
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