Thursday, December 17, 2009

EURJPY—back at support

As I wrote in my last post, I tend to stay in profitable trades, taking profits at various points. I’ve been in this one since December 7 when I went short at 133.03. This is a long time for me as my trading style is geared to short-term trading. In fact, I woke up this morning saying to myself, maybe I should just close that trade out—it has, after all, been hovering around 250 pips profit the last couple of days. However, when I logged in this morning the pair had dropped back to a support level and is currently, as of 8:21 AM EST, at 373 pips profit. What I will do is see how it plays out the rest of the week. I am paying interest on this since I’m short. On the other hand, taking partial past profits on this trade of +43, +180, +264, and +360, means that what’s left is a small position so the interest isn’t a big problem. “Haha,” some could say. “Wasn’t that stupid to take profits off at the +43 pips when so many more pips were ahead?” Well, in hindsight we’re all perfect traders. My answer is no. I did what I did because I wasn’t sure of the future when it was up 43 pips.

I’ve drawn horizontal lines on the daily chart, again in holiday green, that show support at 128.82, 126.89, and 124.37. It looks as though it might be trying to base at the 128.82 level as I write. If I wasn’t short would I try a long? Well, the beauty is that the stop can be fairly tight. However, there’s some negative sentiment against the Euro right now and the yen loves bad news (which means it strengthens) so one would have to be careful. Finally, although, I know I’m getting repetitious, thin liquidity means moves can be erratic. All good traders should be winding down their trading activities for the year and enjoying the holiday season.

Here’s the daily chart:

© Dianne Fecteau, 2009. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.

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