Euro / Australian Dollar went vertical with the breakdown of the Australian Dollar and the resurgence of the Euro. But after the NFP Event this afternoon, it might be time for a breather. 1.40 has been hit and a failed retest should provide a low risk / high reward entry short.
Add-On: I had a short open over the weekend from the close and got stopped at the gap-up sunday night.
I have to admit I DON’T LIKE STOPS
and probably I never will, contrary to all advise given in trading books, articles, and so on.
But over time I learned, that I can’t be right all the time. it’s the same in every profession. You can’t be right 100% and in trading the cost of doing business is taking stops. If I take a stop in one instrument usually I switch the instrument from Forex to indices or commodities.
Because the reason why I took a trade doesn’t change when I take a stop.
And the reason is: There is a signal to take the trade. On the 15min chart above, I had a signal to go short and to add. Unfortunatly, having a signal means, I’m reading the market as well. I see how the market reacts, how it trades and that enforces a belief, that I’m right. I’m right about the market, I’m right about my reading of the market. But if I have to take a stop, I’m usually not. Which means I have to neutralise my reading of the market. Something I can’t do within minutes. Which means, it’s best to trade something else.
Yesterday I was stopped in the DAX right before a huge move up
I was right, but I trailed too fast, as I was in that trade 45 minutes on the brink of getting stopped. So I trailed when I had the chance and got stopped out. 10 minutes after my stop, I did not reenter on the clear long signal, as my belief in my reading of the market was shaken. That in itself was my signal to let DAX be for the day. I missed a huge day, but following Twitter #DAX, as I do, it wasn’t easy to trade DAX yesterday.
Me, I traded Platinum for a change. Search for “Lonmin” on Twitter, if you need to know, if there are any news eventually moving Platinum. AFAIK, it’s the biggest and meanest Platinum mine worldwide and any news from there will move the price.
It took some time, I did not enter at a good spot, but I anticipated a signal on the 30minute, something I should avoid in the future. 2 hours later the Kinjun-Sen crossed the Tenkan-Sen, there was still time to enter at my entry level and risk/reward would have been a lot better.
Btw: Platinum futures trade with a huge spread at times, be careful and only trade with limit orders, as you need to know, that 1 tick is worth just 5$ and not 10$ as with gold.