Sunday, April 26, 2009

Euro Upside Exhausted?

Traded the EuroFx futures in the evening session.....

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Short E6M9 @1.3220, stop@1.3235, exited @1.3185

As mentioned in my Twitter tweet, I had a downside bias for the ES, and this also led me to a downside bias for the Euro as well. Euro opened Sunday Evening's session with a small gap down that was filled. But on the hourly chart, it looked like the odds were high of a continuation of the selloff that started near the end of Friday's session.
I watched the tape, and observed it spent more time in the mid 1.3225's rather than challenge the session high of 1.3241. So on the next time it made a new session low, I shorted. The retrace came as expected, but it was shallow, never exceeding 1.323, so my initial stop was safe!

Then I left my desk. I came back later to see it drop below 1.3190. My target was really 1.3155 (which is where it is currently trading as i type this post), but I covered my short @1.3185 for a couple of reasons:

1. I was not interested in holding thru a retrace that may go all the way back to 1.3220. As it turns out, the retrace never broke above 1.32, but who would have known that ahead of time?
2. If I had used the 9 or 20 EMA as my exit criteria, it would have gotten me out of the short at around the mid 1.3180's anyways.
3. I knew i would not have time to be at my desk to continue monitoring price action.

EuroFx futures (in general) does not move for more than 30pips without at least doing some kind of retrace, so I am learning to be at peace with hitting these small singles and doubles. I still long to hit those home run 100+ pip trades, but still have more mental preparation and tactical planning to do before I am ready.

Euro is around 1.312 as I type. Yeah it sucks to have covered my short too soon. Kind of bittersweet irony to be talking about hitting a home run one of these days, and having a home run slip away right under my nose. But I knew I wasn't going to be at my desk, and I didn't want to scratch this trade, so I exited where I did. I suppose I still have some more learning to do in terms of finding the happy medium between not letting a profitable trade turn into a losing trade, and letting your winners run.

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