A Rare Forex Call

Discussion in 'Forex' started by ForexIam, Apr 2, 2004.

  1. ForexIam


    Long today 5 lots EUR/USD 1.2125

    will add another 5 if it gets to 1.2050

    stops 1.1965

    if 1.2050 doesn't materialize, target on 5 lots 1.2245


    1. Technical bounce of db support

    2. The economic news today seem more like bullshit than real

    to paraphrase:

    {I got this from an economist in NY:

    The results are as follows:

    hours worked fell;
    average workweek fell;
    average hrly wages up 0.1%;
    number of unemployed unchanged;
    total employment unchanged;
    labor particpation rate at 65.9;
    factory jobs unchanged;
    discouraged workers above 500,000;
    part-time workers at 4.7 mill;
    overtime unchanged.

    Of the 308,000, Construction +71k, retail +47k, prof & bus +42k, healthcare +36k, govt +31k, and
    others adding to the 308,000.

    There aren't any new net jobs. It's a mirage. There were 300,000 who lost their benefits in March and dropped off the unemployment rolls into a black hole. If there were more people working, the labor participation rate would rise. The key here is "the number of unemployed is unchanged."
    You add 308,000 and deduct the same amount and bingo.

    He's thinking that this number is positive only in the headline - and that under closer scrutiny, the number is terrible. I'm no economist, but so do I.}


  2. Saham


    That's probably a good trade (long) - I may take it Sunday/UK session and do something similar...

    And I won't set the stop loss because I feel certain EUR/USD will crash through 1.2000, pick off your (recommended) stop @ 1.1965 then either head the other direction or float between 1.1900 and 1.2000 for awhile.

    Good trade,

  3. If euro heads to 1.19, it will probably go even lower to at least 1.1685. There is really no reason to be buying it now IMO. The last upleg was fairly low volume and driven by dumb money. The unemployment number didn't even matter. Even if it was as expected, the euro still would have fallen eventually. On the daily chart, you had a double bottom at the 38.2 fib before it ran back up to 1.2390, and I am sure everybody and their mother longed on that bounce, but it's just a tad bit obvious. You had a similar situation almost a year ago in May/June 03. Euro tried to break and stay above 1.1930 but failed and took pretty much the entire summer before it started to head back up again, and I expect the same thing to happen since nothing has really changed since the last time it tried to break and stay above 1.29.
  4. Market is not rational.

    They want to see good numbers.

    They've got the good numbers on Friday.

    Things behind the numbers might be ugly, but the market won't care.

    Now they're surely starting to fast-forward their 'rate-hike' expectations which they moved backwards a month ago.

    Nevertheless, payrolls euphoria might persist throughout next week.

  5. Flynn


    This particular call might work and turn a good trade, but IMHO this is not the right way to trade plan - adding to losing position and have initial Risk/Reward ratio as 1.28/1
  6. ForexIam


    I don't know what the market is going to do. It may very well behave as you state. The stop at 1.965 is what this trade calls for, within its risk and mm parameters.

    "If euro heads to 1.19, it will probably go even lower to at least 1.1685"
    A very possible scenario. By that time the trade will be off the market at 1.1965 stop.
    If the pair trades lower than mid 1.1900's it may signify more damage to longs than anticipated jmo ofc. For this particular trade I'd prefer not to hold it long bellow 1.1965.

    Agreed on market's behavior, "rate expectations". The reasons for the trade were stated in the first post. It's up to the market to justify it as profitable, or prove it a loss. There are more news coming up this week, some may already be built in.

    Assuming 1.2050 materializes with 1.1965 stop and the original target of 1.2245 the Risk/Reward is 122.5/158 or .775 (Reward/Risk aprox 1.3 to 1) Total position would be 10 lots in the 1.2080's, scaling in to catch it with at least 5lot, in case it bounces up fast.

    Thank you all for the comments.
  7. NEVER add to losers. You made a bigger loss on this trade because you added to your loser.