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.
Gentle Breeze Blows Dollar Higher
Morning folks,
For traders there’s nothing better than when a plan comes together; all too often I just trade what I see (or think I’m seeing), but yesterday’s blog focussed on the chance of making a few quid out of the Aussie Dollar. With Gustav downgraded to a gentle breeze, and the US Dollar destroying all in its path, this morning was a trader’s dream.
I approached the AUDUSD trade with no directional bias, though I noted the bullish RSI divergence yesterday. This morning the Australian central bank cut interest rates by 0.25%. Although this was the consensus there was certainly speculation yesterday about a half percent cut. Initially the Aussie rallied, but it failed to hold above the pivot point (this would have been a good example for last week’s pivot point teach-in).
Hesitation cost me a few pips, but I decided to open a sell bet, just in £1, at $0.8507 with a stop at $0.8525, just above the pivot. My mate Harry Hindsight pointed out that I was way too cautious using a £1 bet, and he’s right. But this isn’t a market I’m that familiar with; I just fancied the set-up and was content to back it in small size. The small bet size allowed me to stay in the trade, even when the sell-off looked to have stopped, and staying in this trade was crucial.
The great news is that the chart is already out of date; after consolidating around the $0.8340 level the rate dipped again and is currently seeing what life’s like below $0.83. My cautious stop is back up at $0.8325, so my worst case scenario should be a profit of £182.
The beauty of this trade for me was that I’ve struggled to enter short bets in GBPUSD with the RSI showing such an oversold position. But by changing the focus I’ve been able to play the Dollar strength from a different angle.
I haven’t quite sold FTSE yet, though I came close again in early trade with the Nikkei being marked down 400 points at one stage. I’ve opened up a sell bet in HBOS, not on the indifferent chart pattern, but partly as a short FTSE play and partly on the news/ speculation that some of the central bank funding might be taken away. I’ve started off in just £3, which was justified as the price rose above my 321p sell level.
At the time off writing I’m champing at the bit to sell FTSE after its break below 5620, but with the Dow hanging in there I might just bide my time to see how the US returns from holiday.
Happy Trading
September 2nd, 2008 at 10:31 am
I’m out. Old habits die hard and when the price looked to be basing around the 83 figure I bought back my bet at 8303.
September 2nd, 2008 at 11:00 am
hi Charles,
sorry for the delay, I’ve been tied up with markets this morning. First off, I don’t generally play the yen, so reckon you’re much more on the scene than me. The bit I was looking at yesterday, the break of a head and shoulders pattern on the daily chart, didn’t hold y’day. Today it looks like the US Dollar is taking on all contenders and winning hands down.
Chartwise, for me there looks like a stronger dollar trend going back to mid-March; the shorter-term mavs aren’t conclusive. I could see trendline support around 107, but if a proper head and shoulder breaks that should lead to a bigger move.
but the dollar’s a pretty strong wind to spit into at the moment, so good on ya for running a tight stop.
September 2nd, 2008 at 11:53 am
Hey FT,
Nows the time to short IL&P? Its heading towards its 3month resistance. Stop @ 6.80/7.00Eur….Good bet?
cm
September 2nd, 2008 at 12:20 pm
hi CM,
can’t argue with the resistance, or the same logic that made me have a pop at HBOS. I’ll hold my hands up and admit I don’t trade the Irish banks enough to know how much is factored in and how many squeezable shorts there are out there, but good luck with the trade
September 2nd, 2008 at 12:59 pm
Hi FT,
Been wrting FTSE calls but share your reluctance to go properly short. In fact, still to take profits on my long bet. We’re currently around the closing high since the July trough and a move above 5648 would be a new high — and given where the Dow looks to be going that is eminently do-able.
So the uptrend continues but I suspect it is running out of wind. I’m looking to close out my long soon. A new downtrend would require a fall below 5300 but I’ll be looking for something to trigger opening a short position well before that — just not sure what that trigger should be at the moment.