Brief Mid Week Trading Update – 1st February 2012

Brief Mid Week Trading Update – 1st February 2012

I’ve been messing around with some positions since the close.

EUR:USD swing short has gone, +30 points banked.
EUR:NZD stop loss moved to breakeven.
EUR:CAD stop loss on a daily close above 1.3258

Indices have made 3 consecutive daily higher lows and higher highs. They also broke above the 61.8% retrace of the high to correction low.

EUR:USD keeps finding buyers when it sells off. Everyone is short, Retail, Hedge Funds, SNB Directors Wife. There’s no way this is gonna collapse without taking a few of those out of the equation.

Trading has been tough throughout this whole Month (January). Trading is harder when volumes are so low because price patterns get broken too easily.

Everywhere you look, the top gurus are all saying EUR:USD is a short. This is the Camp I’ve been in and although I’ve not turned bullish, I think there are too many people on the same side of the trade. The Markets rarely let the majority win.

It’s been a while since I felt this nervous about holding positions (either direction) overnight. I mean, check out the trades log so far for this year. It’s clear from the large number of trades and the large number of small wins that the market’s are not inspiring confidence for me, and looking at the choppy price action and indecision I’d say the majority are in the same boat.

DX is not a bullish looking chart.

Risk on Markets are most likely going higher. They will eventually drop and they will drop fast, that’s what makes it so difficult to buy such a low volume rally, and it really is too difficult to confidently predict when it will drop until it happens. Stick with the up trend for now and sell the first failed 61.8% retrace of a sharp leg down. That’s probably the best way of getting positioned safely and early in a trend turning situation.

Over the last fortnight I’ve seen the best part of 1000 collective pips in profits vaporise to just a couple of hundred across various positions.

Until the picture becomes clearer, whether that be tomorrow or in a few Weeks time, I’m going to stick with taking small trades and tight stops. In the end, this strategy always pays off if your patience can hold through ready for the big move.

That’s my current opinion and I’m happy to change my mind within 24 hours, but right now, I’m not trading stuff I’m really not confident about.

  • Razor Swing Trader
    Posted at 07:02h, 02 February

    Your trades stats are looking very healthy. Could you elaborate on how you are trailing your stops.

    Cheers Brent

  • RS2OOO
    Posted at 23:37h, 02 February

    Hi mate.

    The trades are OK in the fact that they have given profits instead of losses, but looking at that table it tells me that I’m not confident in some of the positions I’ve been taking. In reality if I stick to my system although I would take some losses, I’d be profitable in the long run but in reality the swing trading system can be subjective so until I’ve got it fined tuned to a level I’m happy with, I’m gonna try my best to preserve capital by exiting positions if I’m not confident in them and that’s been happening a lot over the last few Weeks.

    I’ll generally set a stop loss above/below major Support or Resistance on the time frame that gave the original trading set-up. I’ll trail the stop loss manually also based on S/R in an attempt to get it to breakeven or a small profit as quickly as possible. This does mean I get a few stop outs for small gains, but on the odd trade that keeps going in my direction it works very well and I’ll get quite large wins.

    I’ll usually set the stop loss a fair bit above/below the S/R because you don’t want your stops in the same place as everyone else’s as you want to avoid being stop hunted.

    Ultimately if I start having any doubts about a trade I’ll just get out straight away. If it’s in profit I’ll tighten the stops up or exit it.

    It is frustrating at times, but the difference now compared to a few years ago is that now I’m getting frustrated at taking loads of break-evens or tiny wins, whereas a few years ago my frustrations were caused by big losses.

    I’m more of a nervous trader than a gung ho all in trader, but I’ve learnt that Capital preservation comes before profits.