Trading Update – Weds 19/01/2011 – Final Cable portion closed for +298

Hey traders,

Here’s an update to my post last week regarding some of my growth account plays.  You can read the first part here http://wp.me/pFP6t-nQ .  I should also state that I have positions in NZDUSD and USDJPY also trigger this week and I’m following those as we speak however I’m only going to focus on Cable here.

After entry at 1.5655 my first portion of the trade hit T1 at 1.5759 for +104.  Whilst I had an overall target placed for the final portion it was so far away I never really expected price to hit it.  My plan was always to trail my stop behind price. Far enough away to let price run, but close enough to capture a good number of pips.  I wish I could say that there is a fool-proof way to do this that guarantees farming as many pips as possible but the reality is that there isn’t.  You do some back & forward testing and settle on a method that is easy for you to follow and believe in.

I had expected price to double top and reverse at approximately the 1.5860 zone, but I was wrong, and happy to be proved wrong. (Remember we’d sooner be profitable than right.) Price went sideways and then pushed north overnight.  It appeared to be a pattern that replayed itself over the last week or so. USD is sold-off overnight  and then bought back in the afternoon session.  Many times I woke up to check my position only to find it had hit new highs however by the end of the US session it had given back a good portion of the gains.

So my stop was trailed as per my plan. Yesterday (Wednesday) was the release of UK inflation figures which heightened the markets desire for a rate rise and subsequently Sterling rose practically a 100 pips in the session.  I’m not going to deny that I was sorely tempted to take the money and run when it shot north and got to within a whisker of the +400 mark.  However I stayed with the plan and just trailed my stop accordingly.  The pattern replayed itself and the cable was sold off yesterday afternoon as people took profits and bought dollars.  I expected to be stopped out overnight but once again USD was sold off overnight and prices rose back above the 1.60 level.  My stop was trailed as per the plan to 1.5953. Price was once again sold off from 1.6025 and dropped down, touch my stop order and took me out of the position.  My final position was closed for +298 pips.

Now some might say that I should have just taken profit at the 1.60 psychological level and there would be a good deal of validity in that.  And there’s also some validity to the claim that I should have just closed out on the large expansion bar after the UK news yesterday when my position was nearly +400.  They’re both fair points.  At the end of the day I had no idea how far this could run and my plan was to trail my stop and let the market take me out. I followed the plan, it worked well and I was able to follow it easily.  Overall it was a High Quality Trade which also just happened to make some nice profits.  The position returned +402 pips in total for about 60 mins work at the weekend. A nice result!

Until next time, trade well!

FXTraderPaul