21st June 2013: Still short AUDCHF – +709/+9.2R locked in. Never fight the STAM!

“Jip Jaap Stam is a big Dutch-man, get past him if you think you can, try a trick and he’ll make you look a dick, Jip Jaap, Jaap Stam!”

So they would sing on the Old Trafford terraces about their love for the strong, uncompromising dutch central defender (and one of my favourites): Jaap Stam

I bring this up as I’ve been reminded of the potency of not fighting the STAM in my own trading. In my last post I confirmed that I was still short but wondered if the party was over. It looked like the Run south had run its course. There was a lovely 4 hour double bottom (see below) followed by a daily bullish engulfing outside bar. Furthermore I read a news article saying AUDCHF was now overbought and would make a great mean reversion trade.

However The STAM  (My Strength, Trend And Momentum proprietary indicator) was telling me that at the moment the AUDCHF was still in a short selling environment so I continued to follow my plan which was to trail my stop according to my rules and wait for the market to take me out. I expected it to happen at the end of last week or the start of this week just gone. However that’s has not happened – the FOMC announcement gave extra zeal to the AUD selling and USD & CHF buying so AUDCHF kept going lower. You can see that in the up to date daily chart (see below) that price negated the Bullish Engulfing Outside Bar and the double bottom when it closed below them on a daily basis. It may well just be a stop hunt for all the people who bought on the double bottom – hoping for a mean reversion trade.

So I am still short AUDCHF – My Trailing Stop Loss gets moved at the end of every day and is presently at 0.8805 so I have +709 pips or +9.2R locked in. How much further can it go? I honestly have no idea – I just follow my rules and let the market take me out when its ready to turn.  But as always I’ve been politely reminded – never fight the STAM – you’re likely to have your legs taken out from beneath you!

Until next time, trade well!