Good Morning. Yesterday’s currency sell-off triggered several of my buy orders as the EURUSD and GBPUSD pairs dropped through support after support. The end result was that I started to pyramid losses. However, I stuck to my trading plan and planned for a long wild ride. In case any new readers are wondering, I will (re)post my trading plan on this blog later today.
Finally, overnight the pairs started to firm up and now my GBPUSD pair is showing a nice profit as it heads back to the magic $2.00 level. The same with my EURUSD position but it’s still underwater at bit. I have confidence that both pairs will climb back to their highs because the my neural trend models continue to show a strong Euro and Pound relative to the dollar. In other words the Euro and Pound’s trend remains up. In fact the signal coming from the Pound is a “STRONG UP!”
I ran a very successful Forex Trading experiment back in 2007. Some of my results were lucky and others were spot on. The beauty of trading Forex is that the currencies are greatly affected by economical forces and central banks. For example, carry trades are a great business if you just want to park some money in a higher yield currency pair. If you average in you might even make some money catching at trend.
I like Forex because there’s only like 140 or so currency pairs and I can focus on the big ones like EURUSD (my favorite). I can trade on the second time frame all to the way to the monthly time-frames, it just depends on what I want to do.
The downside to trading Forex is that it’s completely nuts. The level of volatilities can rip you to pieces in mere minutes. If you trade with a Market Maker like Oanda, you can start very small but you’ll quickly realize that watch your trades. They know where your stops are and go stop hunting frequently. So it’s a frustrating ‘hobby.’
I encourage anyone interested in trading Forex to do so but start small. Start with $100 and work on your strategy. When I started this experiment I messed up and quickly dropped my trading capital to $80 but I learned what worked after that. I turned my trading capital around to over $150 after one year.
Where’s the GBPUSD now? It’s trading at $1.31-ish. Would’ve been nice to catch that slide in Cable!