Saturday, August 30, 2008

Lookout Below! Falling Pound – Part 2!--IFCN Wk 38 -Fri- Equity: $978.83

I was quite surprised at the action of the British pound last Friday. The falling to new lows after 2 weeks of waterfall action was an example of extreme weakness. This week's repeat of new lows shows incredibly weak action.

This week, the Gbp/Usd didn't fall as much, but this Friday it acted much like a week ago, falling to new lows and triggering a OneNightStand sell trade. The pound was also very weak versus the Yen, so the Gbp/Jpy ONS trade got triggered for an even bigger profit by Friday's close. We are holding those trades over until Monday morning to exit as per the ruleset.

It is good to see more OneNightStand trades getting executed. They are high probability trades and are “invisible” to the mainstream trading world.


We had quite the week in the FirstStrike trade camp. I was beginning to wonder if we were ever going to see the Usd/Jpy fall and stay down until our exit at the end of Friday's trading.

Because it did indeed fall AND I had additional size placed on the trade as detailed over the last few days – the Challenge account profited handsomely.

(To reiterate briefly; because I saw a very low risk situation in the Usd/Jpy FirstStrike trade I placed a much larger position on it, while willing to accept an additional 2% risk to the account. The trade worked out and the account has leaped to new equity highs.)

This week's beneficial profits came from a strong personal understanding of the FirstStrike weekly trading concept. Or luck, as some others will see it.

Of course, the unrealized profits from the two short ONS trades also contributed positively to my week's closing bottom line.


Here's the week's recap:

The data below is as of Friday's close, Aug. 29, 2008:

Start of week equity: $814.41

OneNightStand Exit(s) on 08/25/08 :

*Gbp/Usd: Short @ 1.8511 – Exited at 1.8420 for 91 pips profit.
Total Profit: $ 7.76. (Increase over Friday's equity by $7.60)

Completed FirstStrike trades this week:

  • Eur/Usd: Long @ 1.4767, stopped out at 1.4707 for a 60 pip loss.
  • Gbp/Jpy: Long @ 203.61, stopped out at 202.71 for a 90 pip loss.
  • Gbp/Usd: Long @ 1.8471, stopped out at 1.8411 for a 60 pip loss.
  • Usd/Chf: Short @ 1.0962, stopped out at 1.1022 for a 60 pip loss.
  • Usd/Jpy: Short @ 109.63, exited Friday at 108.81 for an 82 pip profit. (With very large size)
Total losses: 270 pips
Total profits: 82 pips
Net loss: 188 pips ($145.02+) Profit from the jumbo Usd/Jpy trade

OneNightStand 08/29/08 entry(s):

*Gbp/Usd: Short @ 1.8511
*Gbp/Jpy: Short @ 199.60
The above to be exited Monday morning, 00:01 CST
Unrealized Profits: $ 11.80

End of week equity: $978.83(includes unrealized P&L)
Total Gain for Week: $164.42 (20.2% weekly increase)

See you next week. Maybe we'll get some profitable action from this volatility.

Joel Rensink

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Anonymous said...

Hi Joel,

In your last and previous posts, you said that you had increased the size of the USD/JPY trade at the original entry @ 109.63 with a 27-pip stop. ("I re-entered my additional sell at 109.63 again, this time with a stop of 109.90"). The risk on this add-on trade was 2%. ("I placed a much larger position on it, while willing to accept an additional 2% risk to the account"). If you made 82 pips on the trade, then the add-on trade should have made additional 6.07% in profit (2% for every 27 pips). Yet, your account has increased 20.2% over the week. Where did the other 14% of your weekly profit come from if -- based on what you wrote -- it seems that the size of the USD/JPY add-on trade was much larger than the size of the original USD/JPY trade and the other Firststrike trades ended in a loss? I can’t see how this adds up. Could you please clarify it?


Joel said...

There is no mystery.

I placed a very large size trade at the same price as the original FirstStrike Usd/Jpy with a very close stop.

It came extremely close to hitting it, but didn't.

Because it didn't stop me out, I had a very large profit.

This was no phantom trade. Last week I completely described the details of the position increase and I explained my rationale.

The only thing that surprises me is that I didn't make a greater return. The conditions were right and the trade was right.

That is trading.

What everyone saw last week is how trading really works. The regular trading one does exposes you to conditions that can offer you unique advantages. It is up to you to take advantage of them or not.

The more familiar you are to trading and your method can enable you to increase your position size on a winning trade dramatically with little additional risk.