Wednesday, January 25, 2012

Sometimes, I'm lucky

Wednesday, January 25, 2012

Total gross profits:  $100.00 +2.00 ES points
Total trades:  2  [0 scratch]
Accuracy:  100.0%
Execution score: 100.0%
Opportunity cost: +$0  +0 ES points

I only had 2 trades this morning, and one was a reversal signal which made me exit out of the trade early.  But since it appeared everything was at a standstill and choppin' around until the FOMC news releases were out and digested, I decided to take care of some non-trading related duties (I went to Costco, yeah!).

So I left late in the morning and thought I would be back in time post-FOMC news trading, but ended up being out much longer (darn tire center took forever, UGH!).  I returned when the regular cash session was almost closed, and was surprised to see that our friend, volatility, had returned!

The Euro was exceptionally volatile, which brings up the long trade I entered back on January 13th.  As longer time readers know, I've always had an affinity for the forex markets, and have dabbled in it.  But before we get to the specifics, it's always interesting to see how some trading ideas come up, and how some trades I've taken have more of a story.

Planted the seed by showing a picture and whispered to all those that listened...the bottom in the Dollar might just be here.

Saw the picture, heard the whisper, connected the dots, and said "Euro strength?"

Heard the whispers between @treeee50 and @Jay_MTF, then listened to the Boss Man, got the plans and executed the mission.

The DiamondSetups "Boss Man" with the killer overnight levels for the Euro (and ES, CAD, crude oil).  Seriously, his overnight levels alone are worth the subscription price to his trading room!
But going back to this particular trade, the reason why I'm so lucky is because this trade came within 3 pips of my stop loss order.  Yes, I almost got taken out on this particular mission.  I was using Renato's Euro support levels from the overnight session, and was using the conservative entry levels with relatively tight stops.  So instead of getting stopped out and missing the big move, I've been fortunate to have entered it near THE bottom, and rode it up with relatively minor bumps along the way, so far.

EURUSD 120m chart
As I write this, the Euro is up about +450 pips from my original entry level, so it has approached an area of profitability where it's one of my better forex trades (assuming I closed it right now).

Speaking of good trades, let's not discuss the EURCHF trade back in September where I was up nearly +800 pips until it...ugh, heartbreaker.  Well, the lesson I learned from that experience is that in the forex market, the near impossible move can happen, so nothing is certain (including stop orders) until the trade is closed.  And that disclaimer includes this open trade.

My preliminary profit target for this Euro trade is near the 1.3250 area, which is simply the 38% retracement of this big leg down.  So either we'll get to that profit target area, or there will be some other signal that tells me that the move is over and that I should exit. 

But regardless of the outcome, I will consider myself very lucky that I was able to be in the right place at the right time, and overheard a conversation (thanks twitter) that lead to what has been (and could be) a great risk/reward trade.

And although I won't ever say this enough, thank you to the great cast of characters I mentioned above, as well as all the others (you know who you are!) for the great daily dialog we have regarding the markets and trading.  It has certainly made this oh-so-challenging journey to become a consistently profitable trader a really great experience.  Let's keep it going!!

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