AUD TRADE EurAud: (Nov 30, EurAud moved for now to the Euro Trade as a new companion with +1500 pips floating.) Even though we manage the EurAud positioning as a companion of our EurUsd exposure, we can talk about it here since we are going to have highly impacting data this evening on the AUD side. First the Chinese numbers then the RBA decision on rate. The latter is important since almost half of the analysts see a rate cut this evening. From this we can conclude that a hold from the RBA is bullish. The Chinese numbers are less and less impacting the AUD because Australia managed to move its economy a bit away from the mining sector influence. Conclusion: We think the RBA is gonna hold seeing how improving are the Econ numbers. Nevertheless we generally dont play with a central bank decision mainly when half consensus is seeing a rate cut. Here we dont risk much because the upside is structurally limited by the Euro, though we dont add to the exposure. The stop we have on the chart are old and are here to cover the EurUsd trade. GbpAud: (We moved the pair to the GBP trade.) This one is trickier, because GBP is in a nervous mood, trying to fight the USD. We think the GBP is in the hands of some techs ignoring how hard they will be slammed by real money at the first liquidity cluster. However vs the AUD, if the RBA decide to cut we could be badly hurt though not too badly and that’s why we don’t add here but don’t lock either. AudJpy: We have a stop for both positions at the level of the left engulf on H1 (white square), and a TP for the higher position only. We don’t have any serious conviction on this pair . The tension between Turkey and Russia seems to ease, therefore we don’t see any upside to the Yen for now (safe haven). And in case of a rate cut from the RBA this can pull us deeply south and, we with no real view on the pair, facing it doesn’t worth it. That’s why we have TP and Stops and they can be hit during the knee jerk prior to the release all together.
FOREX RISK MANAGEMENT. I received many emails asking me how can I be that heavily loaded ahead of huge catalyst. The answer here is probably the most important thing a Forex trader must achieve and is directly linked to that mindset characterizing successful traders either on Forex or on Derivatives. The big catalyst being on the Euro: Right now on EurUsd I have -1M on the lower range targeting 1.0550 area with a total exposure of -2.3M and this with a highly leveraged 10k initial account. The current floating P&L on EurUsd, since I am way heavier near the current price is like -$500. On all the other positions (excluding EurUsd) I have exposed 2.20M with a floating P&L around +$22K. My account value (banked in) is around +17k, that is our account has made +70% until now. It's already a huge profit in such a short time many traders dream of. But what is important is that I don't expose my account and its current value but my floating P&L. Here due to that mindset I talked about, my risk tolerance concerning the floating P&L is very high though never blind and concerning my account value I am highly risk averse . If you're not able to accept huge fluctuations in your floating P&L (though without impacting your account value) then the way you trade is weak (and you generally use TP and stops). It's as detrimental as accepting losses on your capital value. To make it short: Trade with your floating P&L not with your account. And to build a significant floating P&L you can trade with, you need to understand thoroughly what's happening and not rely on guts or some systematic illusion. Hope this helps.
GBP TRADE GbpUsd: WE don't add cos of our heavy size on EurUsd. Our target area is looming. By target we mean an area where liquidity and estimated valuation converge and can generate some significant reversal. We will probably liquidate the lower positions very soon.
AUD TRADE AudJpy: We are now holding +250K while looking at 92.000. Since we don't have any clear incentives me moved the lock higher GbpAud: Holding -250K and we will keep it after ECB cut if any. EurAud: Holding -750 K and we will move the lock before ECB cut if any.
EURO TRADE EurUsd: Holding -3.75M will TP 1M or 1.5M depending on Yellen speak due in a couple hours. EurJpy: Holding -275K and not adding because of our heavy exposure to the Euro.
GbpUsd: As said in the quote Closed 450K. The target area was almost reached and we need to deleverage a bit. Notice :This is likely going lower intraday
FOREX Our Account has been doubled at $22611. Since the beginning in October we made 3049 pips. Not showing off but just to say we could have made those pips way earlier but without having almost $30K floating P&L as we have now. The $30K floating P&L being our trading capital.
GBP TRADE GbpUsd: We sold 100K above 1.49 and pending a sell stop at 1.4930 for another 100K We are adding here because we see more downside to the pair which is likely to move lower even after ECB decision. Remember we are building up our GBP trade more and more independently from the EurUsd which is more resilient near its valuation level and 1.0500 KO barrier. The 100k size is because we took profit already and we are covered by our higher positions and the GbpAud companion positions. This a weekly chart to see our medium/long term target. No clear view on timing so far.
FOREX RISK MANAGEMENT PART 2 From what we said in the quote: Your first goal is not to make banked in pips but to build a floating P&L you can use as a substitute for your capital . You must acquire a mindset highly tolerant to floating P&L fluctuations so you can deal with intraday volatility, re-positioning and liquidity search. You must take partial profits to slowly but steadily grow your account and your margin capacity (like what we do with the TP for -1M on EurUsd so we can handle the turbulence after the Fed hike if any). You must diversify you exposure to limit the correlation of your positioning with companion pairs and other trades like we are doing on GBP and AUD. Never take parallel risks like being badly exposed on the Euro while in the same time adding to the AUD. Accept significant fluctuations on your P&L only when consensus is well established. Don't be blinded by the size of your floating P&L, take into account that a shrinking P&L is also a factor questioning your view. When the question "When do we take profit?" becomes irrelevant to you this is when you start acquiring that unique and needed mindset to trade successfully.