Tuesday, November 11, 2008

Rangebound Trade Continues-- IFCN Wk 49 – Tue- Equity: $1,530.10

There isn't a lot of activity going on in the currencies, other than ranging trade that develops after large moves like we've seen in previous weeks. Banking institutions and trading firms are testing to see how committed their trading cohorts are to defending their positions, causing many false starts and aborted moves.

In general, it is wise to have smaller commitments when this type of market appears, and since we are positioned with trades with larger-than-normal stoploss parameters we are effectively trading with small positions. Adaptive risk works well when volatility is still relatively large, and yet allows the potential for profits when markets start trending again.

I'm all for the forex markets to congest a bit more before trending out of this area. But the markets don't care what I want. The best I can do when they are like this is just wait for my trades to execute.

Monday morning I exited two FirstStrikePlus trades profitably just after Midnight CST. Then, starting late Monday and early Tuesday, we entered 3 new trades to give us complete coverage in all 5 pairs. (See current listing below)

There were no OneNightStand trades to exit Monday morning.

FirstStrikePlus first-profitable-opening Monday exits:
*Gbp/Usd: Short @ 1.5881, exited at 1.5776 for 105 pip profit.
*Usd/Chf: Long @ 1.1664, exited at 1.1756 for 92 pip profit.

These are the current week's FirstStrikePlus trades (including 2 trades from last week):
  • Eur/Usd: Short @ 1.2681, stop 1.2917. Trade in progress.
  • Gbp/Jpy: Short @ 154.84, stop 160.27. Trade in progress.
  • Gbp/Usd: Short @ 1.5532, stop 1.5879. Trade in progress.
  • Usd/Chf: Long @ 1.1853, stop 1.1721. Trade in progress.
  • Usd/Jpy: Short @ 97.18, stop 100.15. Trade in progress.
FirstStrikePlus trades will be exited on Mondays at 00:00 CST if profitable. (First-Profitable-Open Exit) See complete rule-set for effective trade management.
Trading account equity: $1,438.10

Silver position equity: $92.00
(Current XAG price: $9.86 – 200 unit position average: $9.40)
TOTAL Equity: $1,530.10

We've seen a lot of swinging prices in the XAG. As some have noted, the current XAG position unnaturally affects the Challenge account. I am very aware of that.

As risk/reward concerns are the stuff that traders live and die by, I know that the silver position is a valuable addition to my account, and very likely a position trade that can add incredible value vs. the short term risk and volatility negative effects. This may not suit you however.

If you do not wish to trade the XAG, don't. I was able to add it because of the outsized profits the Challenge account garnered in its regular trading this year-- and the risk/reward was so biased in my favor. I would rather have some of my excess balance holding silver than just sit there unused.

If and when silver is over $20, the human mind will be asking, “Why didn't we pick up more silver when it was under $10/ounce?”

Have a good morning.

Joel Rensink

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent. Please do not use AOL, Hotmail or Yahoo addresses. They've been known to filter out more good mail than actual spam. Try a Gmail address. It's free, simple and perfect for traders!

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