BOE cuts rate by 50 basis points

This is a case where my bias against the GBP is completely wrong. When BOE cut rates by 50 basis points, the Cable rallied instead of dropping. Its a good thing that I did not suffer any losses on this trade.

GBP/USD (Short... yet again!)

Yes.... that is how bearish I am for Cable. Yesterday, shortly after I closed the trade, the Cable rallied 200 points to a high of 1.445. I was extremely lucky to had escaped in some sense. For a volatile pair such as this, it is perhaps wiser to be prudent and thread carefully. Nevertheless, I still see opportunities in shorting this pair. So I am initiating a short order at 1.44 and let's see if it hits my trigger.

Update 1
The trade triggered this morning but I did not get lucky this time. The pair went against me and I took a loss for 60 pips at its peak around 1.4460. The pair is really more resilient than I thought. Guess I should not be so stubborn. Discretion is the better part of valor. Best stay on the sidelines and watch till the trend becomes clear. Bank of England will make a rate decision tomorrow. Maybe its wiser to re-visit this pair after decision has been made

GBP/USD (Short... again???)

Unfazed by my loss overnight, I am re-entering a short position on GBP/USD. I am still of the opinion that the correction for the Cable's recent rally is not done yet. RBA slashed the interest rates to 3.25% catching up with RBNZ. Obama warns of more bank failures.

Update 1
The Cable swings wildly and the trend seems unclear. I decide to take a early profit of 56 pips at 1.4194 and closed the trade. This pair is definitely worth visiting again. So do not be surprised if I enter another position this week.

GBP/USD (Short)

This week is gonna be another exciting week for forex traders as Reserve Bank of Australia (RBA), Bank of England (BOE) and European Central Bank (ECB) will make rate decisions. GBP rallied strongly against all other currencies last week recovering 800 pips from a low of 1.36. I am of the view that the rally is fatigued and indeed this morning, GBP/USD dropped close to a 100 pips from last week's close. I am jumping onto this falling trend in hope that the trend will continue into 1.40. I shorted at 1.4361. My stop-loss is 1.4425 and I set my initial profit taking stop at 1.42. I will adjust the profit taking stop when the trend pans out as what I anticipate.

Update 1
The pair pulled up shortly after I entered the position and went precariously near to my stop loss. But it dipped quickly and from there it was one way down. I adjusted my profit taking stop a little to 1.415 and before I knew it, my profit taking stop was hit. I made a nice 211 pips on a full position. May enter short again on this pair if opportunity presents. A great start to the beginning of the month!

Update 2
Just as I thought its over for this trade, another opportunity shows up as I was writing Update 1. I entered a fresh position short again at 1.42 which was 50 pips higher than my last close. Stop loss placed at 1.43. Profit taking at 1.40 (aggressive but unlikely). Think we can continue to ride this trend down?

Update 3
Surprising, the Cable continue to hold and the pair rallied overnight and hit my stop loss making me take a hit for 100 pips. So instead of 210 pips, I got 110 pips. Still not too bad for a day's work

January pip tally

NZD/USD short -50 pips
USD/JPY short +55 pips
GBP/USD short +420 pips
USD/CAD long +250 pips
EUR/USD long -120 pips

Total 555 pips

In the first month of 2009, I recorded 5 trades. 3 winning ones and 2 losing ones. Total I made 555 pips for this month. Not too bad. Do note that I am only recording pips and not monetary value as the denominator currency may be different for each trade and some positions are actually half positions. I will try to think of how best to present the pip tally in a more objective way next month. I also did other trades on the side which I feel is not worth putting it down in the blog.