December 2014

I'm somewhat late posting details of this trade as it was entered by an electronic limit order at a time where I had no internet connection to tweet it live, although details of the trade possibility were posted on the ADVFN forum in advance. In short, here is what attracted me to this trade, entered at 1.4260:

Having day traded the short term range in GBP:USD throughout much of last Week, this morning I entered a long, initially planned as a day trade but after further thought decided to give it some breathing space, albeit with one eye regularly checking up on it. The main trend is clearly down and has been for some Months but a time has come where practically every time frame is showing almost extreme levels of positive MACD divergence. This in itself is no guarantee of a reversal, but should lead to a correction of some kind, and even a weak correction is still adequate to take 100 pips or more.

After some Months without seeing a single swing trade opportunity I felt comfortable with, I've finally taken the plunge with a GBP:NZD swing long. Although its a choppy pair to say the least, the overall trend has been up for almost 18 Months now even though a glance at the chart doesn't immediately suggest that. Volatility aside, MACD and the moving averages do suggest a probable continuation of the ongoing move, which ideally will lead to a more sustained move higher.

Following a discussion on the ADVFN FX forum thread I thought I'd reproduce my post here so as to keep it for future reference. Please note that some of the statements herein are taken from a research paper written by William K.N. Chan, former Head of FX Strategy in HSBC Asset Management. I have a consistent swing trade win rate of around 75% and a day trade win rate of between 75% to 90% of all day trades taken over a typical Month yet the value of my account does not increase proportionally with that win rate because a fair percentage of my losing trades incur a loss greater than the gains made on an average winning trade.

Firstly an update to my previous post where I cited GBP:NZD as the favoured swing trade from my watch list. Yet again it performed as expected but yet again I didn't enter the trade due to my focus being elsewhere. However, it may not be over for that pair and I do continue to watch it in case it develops into a larger and more sustained move down but clearly the safest entry point for such a move has now passed. If you took the trade yourself than a trailing stop would probably be a sensible precaution maybe 200 to 250 points above the current print of 1.9745