ForexSpirit

A rather hectic week at the regular day job has meant there has been no time for any updates this week. The last few bugs in the PlayStation 3 version of F.E.A.R. should now be squashed and it will be winging it’s way to store shelves in time for the European launch of the Playstation 3.

While I didn’t actually put on any new trades this week, I did close three.

The first trade closure happened on Monday, and was a close of a Q1 trade that I have placed the previous Thursday. That was a pretty standard bread and butter trade where I just went for 30 pips.

On Tuesday morning I closed out my oldest open trade. It had originally be entered all the way back on 8 December of last year, at a price of 1.3247. The reason I did this was the consensus at the time that the slew of economic releases to come on Wednesday, Thursday and Friday were all going to be dollar positive. There was a pretty good chance that the current high Q1 price was not going to last in the face of such an onslaught. Closing out the trade lightened my gearing load, which would allow me to enter a trade with a greater chance of seeing profitability sooner if price did go down to test the significant support in the 1.28-1.29 region. Exiting this trade resulted in my one and only loss for the month of January.

My third trade exit occurred on Wednesday and was the closure of a Q1 trade that was opened on 16 January at a price of 1.2952. I exited at 1.3006 when price had stalled for a few hours after the release of the poor Chicago PMI and construction spending numbers.

Those dollar positive economic releases didn’t really pan out as had been forecast. My closing out of my losing trade on Tuesday was still prudent at the time. With the lack of really great US numbers the waiting game in the 1.29-1.30 region goes on. There were even rumblings on Friday that the ECB will hold off until April before they hike again. So that put a damper on any euro bulls for the moment. So I just sit and wait for something to jump start us out of this narrow trading range.

This is how those exits look on the chart:

I also still have three trades open that I entered during the first week of January when the dollar bulls had their time in the sun. Those three trades were opened at 1.3161, 1.3097 and 1.3022. With the current outlook looking more and more euro bullish I am comfortable in holding these three positions, even considering the small daily interest payments that are required in holding them.

Now let’s take a look at the month of January as a whole.

Twelve trades were closed out last month, with only one loser amoungst them. Five of those trades were actually initially opened in the month of December, which includes the one losing trade.

Even with a losing trade of 291 pips I was able to realise a monthly return of 9.5%. My losing trade was counteracted by several large winning trades, just as my trading plan dictates they should be.

This week I was also able to start trialing the news trading method now taught by Tom Yeomans. I started with the US consumer confidence number on Tuesday. This came in pretty much on the expected consensus and so was a scratch trade.

The next day I traded the US GDP release which gave a US dollar buy signal. I waited until after the initial spike and retrace. Once I saw the dollar show some momentum on EUR-USD I entered and was able to grab nine pips in eight minutes. Since I am trying to determine if I can be regularly profitable at this type of trading style I am only using a small live test account that I have with Oanda. It is vital to use a real live account when testing a news trading strategy given the way that the broker can change the spread and otherwise impact proceedings around such a volatile trading time. While I may be using a live account I only have a small amount of money in the account, and only use 1:1 gearing on my trades for the moment.

On Friday we had the always interesting non-farm payroll economic release. The actual headline new jobs number came within one thousand of my buy euros trigger value. Given that a trigger of 50,000 was used, I decided to use my discretion and make the trade after the spike and pullback had finished. There wasn’t a huge spike so I was only looking to extract a few pips from the market. I was able to grab 10 pips, pretty much at the high of the day, as the dollar soon took over and saw price falling from 1.3060 all the way down to 1.295 before the end of the trading week.

That’s two for two so far on the news trading front. Obviously it’s very early days yet so I’ll need to get a lot more trades under my belt before I can properly see what the expectancy of the system is.