SHOW ME THE MONEY

Here is a recent trade I made where I felt like Charlie Brown and Lucy had just pulled the football at the last second once again and I wound up on my ass with nothing to show for the effort.

There has been a massive amount of commercial selling in the AUSSIE DOLLAR during it's recent rally. Of course the problem has been that it has been in a huge uptrend. Heavy commercial selling in these situations is not always a very reliable way of determining future direction. At times the hedging activities of commercials show them fighting trends for months at a time. However, I have seen so many instances where they have just been so dead on picking tops and bottoms, that it is hard for me to totally disregard this type of activity.

Here I waited for the Large Trader Proxy Index to go into the short zone, indicating that at least for the moment, the trend accelerators were beginning to exit their longs. Once I saw this I then went to look for a pattern for an entry, which is displayed above. Pretty simple, just a lower short term high, and a break of a low after that formed.

Then came Dubai!!! This news story messed up alot of markets for a day and this was no different. There was a huge downmove early in the electronic session over the holiday, which is very rare. I mentioned it in here previously. As a result I put my stop orders for entry in thinking they might fill, and boy did they. The market just tanked, leaving me with a huge profit ( I had alot of contracts on this ). As you can see this move also broke an uptrend line drawn in RED. Since I had been looking for a much bigger picture break, I decided to go for a much lower target to exit, thinking I might have a big one on the line here. As a result I simply moved my stop down to a few ticks better than my entry, so if hit I would cover the commission with a few bucks left for a beer.

This stop was so far back I thought there was no way it would be hit. However, whenever I have more than 1.5 times my initial risk in profit, I will never let that become a loss. Trading is just too damn hard, so you cannot allow the ones that you are right on bite you with a loss.

Unfortunately, the market reversed with the Dubai incident simply being a one day wonder, so they showed me the money, but took it away. It is always easy to just post all the trades that do well, but I feel that is disingenous. No matter who you are there are times when you get beat up, and the purpose of this blog is to cover all aspects of trading, the Good , the Bad, and the UGLY.

I am not sure which this falls under exactly.

Below is a weekly chart that shows the commercial selling I referenced above