02/12/09 EURGBP Part 2 Scalp and swing continued, +10, +20 & +53

So carrying on from my last post I am short EURGBP from 9128 on a scalp trade and short from 9105 on a swing trade.  The Scalp trade was set with an auto trailing stop of 25 points and had already moved itself to 9108. The Swing trade had three targets of which the first one ,T1, had been hit for +26. 

When I came in this morning price had retraced a good few points from yesterdays lows.  My positions were still holding and I waited to see what today would bring.

As price retraced I noticed that on the hourly price was running back into the Medium Term Moving Averages which started to get my attention.  I knew that if price pivoted off these dynamic resistance lines that my trade would ok.  Furthermore I knew this was the chance for me to add to my position and take another step in my evolution into being a trader who presses his winners. The chart and notes below should explain what happened.

 1.  As mentioned price had retraced overnight.  At point 1 price printed a hi-test bar /shooting star on the 60 min chart.  This was also exactly where the 4 hour chart kissed and reversed off its 4 hour trend line.  This was a great signal to add to my trade so I created a plan.  I would add to my position by placing a sell order @ 0987 (2 points below the hi test bar) with a stop 25 points away.  Whilst my add-on position as aller in terms of % risked because the stop loss was only 25 points away it meant my position size was effectively doubling. The order was placed and I waited.

2. I didn’t have long to wait as price dropped through my entry point and continued down.  As price moved down I decided to pay myself so I removed elements of this add-on position at +10 & +20.  The add-on position stop-loss was moved to break even @ 9087 and I now have another  risk free position in EURGBP.

3. Price continues to move down and ‘malingers’ in the area between 9050 & 9060 before finally hitting my Scalp positions auto trailing stop point which moved the trailing stop to 9083 locking in 45 points of profit.  Price also hits the T2 of my Swing position at 9052 for +53 on the 2nd portion of my swing trade.  The stop loss on my swing trade was now moved to break-even at 9105.

So overall today I’ve taken +10, +20 & +53 profits banked and locked in +45 on my scalp trade. A nice days work.  What I’m more pleased with is the processes by which I traded.  Adding to a position is hard but I was lucky today that the opportunity to do so was so relatively easy and clear-cut.  I can only hope that it works so well on future trades.

I’m very surprised that my scalp trade is still running.  I thought it may give me 20 points at very best.  It’s nice to be able to just watch it play out without any interference from myself!

Learning pont:

1.  As mentioned adding to a position is hard, but all the truly great Traders fully understood the meaning of the trading adage ‘Cut your losses and ride your winners’. It’s imperative to push your winners as hard as possible.  It’s likely that 80% of your profits will come from 20% of your trades.

  The 3 positions are still open and price continued down further as the day passed.  I shall keep you updated.