Last week the technical picture in EUR/USD finally lined up with the fundamentals - producing multiple sell entries after a clear breach of the long term up trend. This was written up in the post "EUR/USD - A Sell in 3 Pictures". I view this as a longer term trade, and remain short looking for major downside moves - possibly as low as 1.2850. A regular reader has requested a follow up (thanks Michael F), so today I'm posting something I've never posted before - my actual trades as they currently stand:This is the trade view of one of my CMC accounts. As you can see, I'm still short EUR/USD, on multiple entries. For those who haven't seen this view before, it is accessed by toggling the up/down arrows in blue near the bottom left of the chart. The gold arrows on the chart are sell entries (the arrows are pointing down). The red lines are stop loss orders, and the thinner green lines at the bottom of the screen are take profit orders.
A few notes:
- I didn't enter immediately the up trend broke - avoiding both a potential false break signal and a sideways market. Markets often stabilise after a break, and then either confirm the break or move back to make a false break. The fall from the first stabilisation level after the break confirmed the negative momentum, under my trading plan for this account.
- As a trader, I try and stay away from the conventional - I don't want to compete with other traders for execution. Once a sideways range was established, I started entering on moves towards the top of the range, with tight stop losses above the range top.
- Once the next leg down arrived, I moved some stops down to protect part of the profit. Preserving some of the profit in this way freed up capital for more entries, increasing the position size as profits grew. This is some times called "pyramiding" into a trade. I use this method when I'm looking for a sustained move over days and weeks with significant profit potential.
- By spreading the stop loss orders, I ensure I'll stay short even through a corrective move - unless EUR/USD climbs above 1.3740.
- Please note - not all of the original entries are on view here. What's not shown are some closed trades - both take profit and stop loss closes.
- While every entry has a stop loss, only two trades have a take profit. My intention is to trade around a core short position, taking some profits on large down moves and certain target levels, so that I can re-sell on any bounces. The two take profits are in place in case there is a drop overnight that I might otherwise sleep through, and miss a profit opportunity.
While this trade is working for me today, there have already been times of severe profit erosion and re-entry. This multiple trade approach allows me to stay short through the swings, helping me to stay on balance and remain clinical about the best entry and exit levels.