Students to my FXOptions classes know I'm on fire. The trades have working with uncanny accuracy. Case in point was the 3 trades I suggested for this week on EUR-JPY & USD-JPY Hedged Trade, the AUD-USD and EUR-AUD Hedged Trade, and Buy Call on GBPUSD. So what's the secret? Simple........BUY in the DIRECTION of the TREND. The Trend is indeed a forex trader's best friend since forex pairs do tend to trend very well (which by the way, makes them excellent candidates for Options Trades too). Here are the principles behind the trades:
1. Short EUR-JPY and Buy USD-JPY - This recommendation was made on Sunday, March 2nd. I was merely betting on the continuation of the downtrend on the DOW (it had fallen by 300+ points the preceding Friday). Since I was not sure of the market direction, I used USD-JPY as a hedge in case the market turned. The market did continue down, the trade was profitable by Monday night.
2. Buy AUD-USD and Buy EUR-AUD. The RBA was due to give its interest rate decision on Tuesday, March 4th, so trading the Aussie naked was a definite No-No. There was also a possibility that the overextended Aussie would retract after the Interest rate announcement (or it could fly, of course, like the venerable Euro). If the Aussie retraced, our gains on the EUR-AUD position would compensate for the loss on the Aussie. The RBA raised rates by 25bp to 7.25%, and the Aussie retreated, putting this position into profit by Tuesday morning.
3. Buy GBPUSD on a breakout. The 3rd trade required a bit of technical analysis. I had just completed teaching a module on Technical Analysis, so it would be fun to apply it to real trading. Enter the Triangle. I said to Buy GBPUSD on a break of a consolidation triangle. If GBP broke down, we would do nothing. The GBPUSD first broke down, and then coolly blasted over the triangle (the triangle top was 1.9917 on Thursday, March 6th) after the Interest Rate announcement, giving traders at least 100 pips!
3 Profitable Trades. Shows that it pays to know the fundamentals! This is why we need to read every day to understand the "pulse" of the market. Wanna learn more? Join the next FXOptions class!
Chief Shook
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I'm a bona fide nutcase! A mixed flavour pudding of tortoise trading ("man man lai") of equities,derivatives, and forex. But that's where compounding and alpha investing come to play. MAKING MONEY on my iPhone. Generating Passive Income while attending boring meetings!... and oh, btw, I talk about Social Media Analytics too. Need some career options to fall back on. Enjoy
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About Me
- Chief Shook
- I am a professional trader who trades for living,and provide investment,tax, and Information technology consulting services. I trade from home through the Internet, and find it extremely exhilirating,as it provides both financial and time freedom (no boss,what a concept, huh?). These are egotistical rantings of a man on the street trying to make a buck!
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Financial investing involves a degree of risk, and concepts explained herein may not be applicable to an individual's or group's circumstances and needs. The information contained in this blog is general in nature and should not be used to enter into any investment transactions, neither does the information contained herein represent any solicitation for the buying/selling of securities and derivatives. Although we have taken care to ensure that our opinions are based on sources believed to reliable and are written in good faith, there is no warranty, express or implied, to their accuracy and completeness.
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