Showing some restraint

Last week the Dow popped down for a close look at 8000 and decided not to bother. The screens were full of reasons for a savage bounce but, more importantly, will these levels hold?

Not a great week’s trading though; luckily a late-in-the-day forex trade bailed out some poor trading in FTSE. I made money by closing out a short bet on FTSE, then made the mistake of trying it again after blisteringly bad numbers from Citigroup and Merrills. But in a week of bad news, traders just couldn’t be bothered by these numbers; after all, the banks only need to pull the arm on the taxpayers’ fruit machine and money will come pouring out.

Needless to say the loss wiped out the overnight profit as I stopped out near the high of the day (doesn’t that just always seem to happen?).

Undeterred I went £2 short this afternoon at 4208 and I’ll probably run it over the weekend.

I’d been prepared to leave Sterling alone towards the end of the week. I missed the early move and didn’t fancy chasing it near $1.50. But as the price retreated back to the $1.49 area I reckoned there could be a trade on. I keep a record of the daily trading range for GBPUSD; it’s generally over 200-pips, but today’s action fell well short of that. The key was betting on the right direction-a bounce off $1.49, or a decent fall through it.

The first visit to $1.49 saw a worthy bounce, but this was short-lived and next time around I decided to have a go at it. Normally I’d wait for a confirmed break of the big figure before committing myself, but the price action was giving a strong hint at breaking through.

I sold a fiver at $1.4902, with a 40-pip stop. The plan worked and I closed out £3 at $1.4878 and $1.4862 (Friday afternoon is no time for heroics). I bought back £1 at $1.4803 and still have £1 running, protected by a stop at $1.4852. Nice one Charlie!

The charts looked tempting on Friday evening. I don’t like holding forex positions over the weekend, so I left that trade for Monday. The Euro’s had a good bounce from the same low as last Friday, but I still think it has to go easier, regardless of interest rate policy. Discipline, discipline; I shut my screens down early to avoid the temptation.

Hey! Here’s a good tip. If you need to distract yourself from the markets, but need a subsitute, sit down with the missus and watch Coronation Street. Now that has more ups and downs than the FTSE.

Have a good one.