by Gavin M.
The above is the deconstruction of my EURUSD short trade. I sometimes post my private trades publicly, you know, for the kids. The trade was purely a technical based trade because I was not expecting any tape bombs until 3-4 am ET. However, as the evil doers would have their way, a bloomberg headline about Greece somehow got recycled and we dropped some 40 pips from 1.1260 or so. I immediately took my profits seeing as it was a recycled headline. I generally trade with 5 lots or more. Only on occasions where I am extremely uncertain of the outcome do I dial it back to 1. It is crucial as a trader to know how to scale your trades according to your perceived risk. So this trade worked out and it did quicker than I expected. I was prepared to just leave it be for the entire night. I would really commend you if you have not been worn out by the constant Greek tape bombs this month. It has been non-stop and it is the usual sequence of rumor then denial then rumor again and then denial. It almost feels like these individuals are trying to move the markets their way. It is funny though that we had impressive EUR strength today despite the headlines and the imminent default risk for Greece. I said it before, and I will say it again here. They have exposed the markets to the Greek issues so that the markets can gradually price in the eventual collapse. So at this point, the markets are pricing in the collapse with the rise in EUR. The mentality it seems is that the EMU is better off as a union without Greece. In addition, the markets are also assuming that there will be no market contagion. History has always taught us one thing - the markets are always very LATE to react to harsh reality. Case and point: the 2008 recession. I do not know if Greece will leave the EU. I do not know what will really happen. But I do know this - if you are going to trade the EUR or the GBP, you better have your wits about you because none of them are acting rationally. Happy weekend!
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Multiple AuthorsTraders from Equity Sense will be writing on this blog on positions and other market-related things. Archives
May 2018
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