FT has been trading full time from home for two years, with nothing but four kids and a beach to distract him .
He fills his spare time with weight training and rugby, though more coaching than playing these days.
FT mostly trades the forex markets and although he plays FTSE on occasions his bread and butter market is £$.
He likes to think that his technique is evolving but still hasn’t the temperament or money to back the big calls. He prefers to trade between 1 and 3 times a day, aiming to take regular small gains, but feels part of the evolution is in not dealing if the conditions don’t feel right.
The Fun Starts Below The Neckline
I know I’ve said it loads of times, “Better to miss a profit than to actually lose money”, but it’s a bit like saying “Avoiding the risk of chlamydia is better than not having sex”; it’s worth weighing up the odds on each occasion.
In being cautious yesterday I missed out on shorting FTSE and on gold and oil both rallying to record levels. I’ll forgive myself that one as my only history in gold involved losing money last year and fancying that woman in the 1980s Gold Blend adverts.
But the one that really got my goat was the GBPJPY rate, which I’d been watching but failed to realise the significance until I saw this.
Yesterday I was a bit confused by the 550-pip fall in the GBPJPY rate, and I make it a rule not to join in if I don’t know what the game is. But looking at the longer chart revealed all; it was a classic Head and Shoulders pattern, which had broken below the neckline. I won’t spend too long wallowing in the dark arts but the theory is that if the neckline is broken then the price will fall a distance roughly equal to the distance from the top of the head to the neckline. The level of the neckline depends on different charts, but somewhere around Y220.70 the market suddenly got very excited.
Once I realised what the game was I joined in this morning, making a £1 sell spread bet at Y216.35. Choosing where to place a stop loss is tricky after a 550-pip fall; I decided on Y217.75, a level just above the overnight high. The 140-pip distance from the sell price was the reason for only placing a £1 bet. At the start of the year I prefer to build up some gentle profits rather than go in for a two-footed tackle and find myself out the game.
Wu Hoo! At least you know where you stand with Yen trades; either stopped out before the ink’s dry or on a steady earner. My trade worked and I was able to trail my stop loss down to Y216.30, Y 215.50 and Y215.05 before I was stopped out at Y214.55.
I missed the bottom by about 100 pips, the result of being cautious with my stop loss, but hey! I’m not complaining. The trade stuck £180 in my back pocket.
I also bought a £5 spread bet in EURGBP at £0.7438, but as that one’s still running I’ll save it for tomorrow’s diary.
Happy Trading
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