Category: GBP

Independent minded trader

Independence of your mind is essential for trading success.
Why you have to be independent? If you`re not independent on your thoughts you`ll feel yourself uncomfortable without approval of your actions, support and confirmation or even disapproval from somebody else. Markets won`t always provide you with confirmation for your decisions. It is difficult to trade in the short term if you wait for confirmation and require a sense of certainty. If you wait for a classic chart pattern to materialize completely, for example, you may be too late. Staying ahead of the masses requires you to think independently. Let’s suppose that you wait for a head and shoulders pattern to develop. It may take some time, and, most of the cases you`ll be late - you may end up selling as everyone else is also trying to sell. There are times when it is vital to anticipate the crowd and try to stay ahead of them.
Today i started buying USD/GBP, got stopped, noticed today is a USD day, went short, closed the position on small profit for today, knowing this pair have 90% probability to hit 1.9912 today. Fear of a trending up of the price won a battle to my independent mind. Fear + the point to not overtrade + something else.
I`m not sad as long as:
1. Good stop placed for first position (USD/GBP long).
2. Without any doubts shorted this pair later according to the plan.
3. Market followed its way and i was there.
4. Closed second position on good profit for today.
5. The price dropped 90 pips more without me, again i`m not sad here ;-).

Conclusion: Independent mind + good entries (long and then short) - fear - patience.

If supposed that a trader open pair positions in multiple currencies, long and short in direct currencies and long and long or short and short in indirect currencies: for example USD/CHF long and EURO/USD long at the same time and same lot size.
The Sum of the P/L of these two positions changes and when the total Sum of these two pairs reach to a specific profit, trader closes both positions at the same time. So in this strategy positions are always in hedge condition and have very low risk than other cases.
Why? Simply because correlation is important and they do not move in tandem accurately 100% of the time. And you can make money in these imperfections
Yes you could miss great opportunities to make a lot of money, but more important is that you will be stopped out less often.
Capital preservation is primordial and more important it all depends of your attitude towards risk.
It is not perfect but it works as long as you plan your trade and trade your plan.
I`ve tried this with EUR/USD and GBP/USD also with EUR/GBP and EUR/CHF daily trend as a base indicators.
This strategy worked 60% for me. Another 20% with ~0 profit, based on the SL/TP ratio (usually stop loses are far lower than take profits, but GBP moves have a higher amplitude. If one trade is wrong then SL is hit and that trade stopped, while the another trade is going its way until take profit is hit or trade is closed in advantage area).
20% of trades are unprofitable and want to say here that these 20% of loser will “eat” ~45% of earnings in total.
Statistics of this study:
Trades: 18 (*2) = 36
Time frame: 3 months.
Winners 11 (*2) trades. 11 wins, 11 loses. But the final result for every pair is a win.
50/50 7 trades.
7 losers, both pairs. All seven times first was hit one “stop loss”, then market turns back and hits another stop lose.
All stop loses were at 35-40 pips, TPs at 70-110 pips.

Advantage - ~2.5%/month of capital without stress.
Disadvantage - very long time frame, and low(?) level of earnings.

Nothing strange here.

GBP/JPY is climbing back to all time highs, or to its Exchange Rate Mechanism (ERM) levels, before the British Government announced the exit of the Pound from the ERM on Black Wednesday, September 16 1992, after speculators, George Soros amongst them, sold huge billions of Pounds. Soros (The man who broke the Bank of England ) made GBP 1 billion during this episode. GBP/JPY hit 8 year 5 month highs o 240.85-90, its highest level since August 11 1998 highs of 240.91. A break of 240.91- or 241.00 will send GBP/JPY to its levels when GBP was in ERM - to its highest level in 14 years and 4 months high since Sept 11 1992, when it was at 245.15. The GBP/JPY subsequently plunged from 233.03 to 222.48 on Black Wednesday when the Pound exited the ERM.

Barriers at 241?
Forecast?

I entered GBP/USD long @ 1.9870, target 2.0150, trailing stop 125 pips.