Trade Exit: AUD/NZD Long Position, 20-Jan-09

Exited Short Position in Spot FX (mini) AUD/NZD
Closing Price: 1.24374
Opening Price: 1.22885
Contract: 1 (mini)
Closing Contract Value: NZ$12,24374
Opening Contract Value: NZ$12,288.5
Profit: NZ$148.9 (A$120)

Justifications:

• Take profit.

Chart:

AUD/NZD Spot Fx Mini - Hourly

Trade Exit: NZD/USD Short Position, 20-Jan-09

Exited Short Position in Spot FX (mini) NZD/USD
Closing Price: 0.5335
Opening Price: 0.5475
Contract: 1 (mini)
Closing Contract Value: US$5,335
Opening Contract Value: US$5,475
Profit: US$140 (A$212)

Justifications:

• Take profit.

Chart:

NZD/USD Spot Mini FX - Hourly

Trade Entry: AUD/NZD Long Position, 16-Jan-09

Security: Spot FX (mini) AUD/NZD
Direction: Long
Opening Price: 1.22885
Contract: 1 (mini)
Opening Contract Value: AUD$10,000 (NZ$12,288.5)
Stop Level: 1.2000
Amount Risked: NZ$288.5
Interest rate differential fee: -0.75% p.a.

Technical Justifications:

1. Standard & Poor’s warned that it could downgrade the country’s foreign currency debt rating, sending the Kiwi dollar on a downward spiral against other currencies; and NZ central bank expected to cut rates by at least 100 basis points on January 29, see here.
2. There is a breakout on the daily chart resulting in a 1-month high for the pair.

Chart

AUDNZD Spot Mini - Daily

Trade Entry: NZD/USD Short Position, 16-Jan-09

(Re-Entry)
Security: Spot FX (mini) NZD/USD
Direction: Short
Contract: 1 (mini)
Opening Price: 0.54750
Opening Contract Value: NZD$10,000 (US$5,475)
Stop Level: 0.56750
Amount Risked: NZ$200
Interest rate differential fee: -4.75% p.a.

Technical Justifications:

1. Economic data still points to a bearish NZD - CPI figures expected to deteriorate.
2. NZDUSD has experienced a 200pip retracement recently, but this is expected to be short lived and resume its bearish trend.
   

Chart

NZDUSD Spot Mini - Hourly

Trade Entry: AUD/USD Short Position, 16-Jan-09

(Re-entry No.2)
Security: Spot FX (mini) AUD/USD
Direction: Short
Opening Price: 0.67211
Contract: 1 (mini)
Opening Contract Value: A$10,000 (US$6,721.1)
Limit Level: 0.65211
Stop Level: 0.68411
Amount Risked: US$120
Interest rate differential fee: -4% p.a.

Technical Justifications:

1. Unfavourable economic conditions and lower commodities prices are still putting pressure on the AUD/USD.
2. There has been a retracement in the previous day, which saw the AUD/USD pair rally about 200pips from a 1-month low; however, if it fails to break the previous high (resistance) of 0.6811, then prices should resume its downward trend.

Chart:

Spot FX (mini) AUD/USD - Hourly

Trade Exit: NZD/USD Short Position, 15-Jan-09

Exited Short Position in Spot FX (mini) NZD/USD
Closing Price: 0.53563
Opening Price: 0.55668
Contract: 1 (mini)
Closing Contract Value: US$5,356.3
Opening Contract Value: US$5,566.8
Profit: US$210.50 (A$318)

Justifications:
Trailing stop loss reached.

Trade Exit: AUD/USD Short Position, 15-Jan-09

Exited Short Position in Spot FX (mini) AUD/USD
Closing Price: 0.66060
Opening Price: 0.66721
Contract: 1 (mini)
Closing Contract Value: US$6,606
Opening Contract Value: US$6,672.1
Profit: US$66.10 (A$100)

Justifications:

1. Trailing stop loss reached.
   

Trade Exit: USD/JPY Short Position, 15-Jan-09

Exited Short Position in Spot FX (mini) USD/JPY
Closing Price: 88.8500
Opening Price: 89.300
Contract: 1 (mini)
Closing Contract Value: Ұ888,500
Opening Contract Value: Ұ893,00
Profit: Ұ4,500 (A$77)

Justifications:

1. Trailing stop loss reached.
   

Trade Exit: GBP/CAD Short Position, 15-Jan-09

Exited Short Position in Spot FX (mini) GBP/CAD
Closing Price: 1.8200
Opening Price: 1.8000
Contract: 1 (mini)
Closing Contract Value: CA$18,000
Opening Contract Value: CA$18,200
Loss: CA$200 (A$241)

Justifications:

1. Stop loss (1.8200) level reached.
   

Trade Entry: GBP/CAD Short Position, 14-Jan-09

Security: Spot FX (mini) GBP/CAD

Direction: Short
Opening Price: 1.8000
Contract: 1 (mini)
Opening Contract Value: US$10,000 (CA$18,000)
Limit Level: 1.7800
Stop Level: 1.8200
Amount Risked: CA$200 (A$241)
Interest rate differential fee: 0.00% p.a.

Technical Justifications:

1. British interest rate is at 1.5%, which is the lowest in 315 years. A lower interest rate tend to negatively afftects the currency.
   
2. Currency pair is in a downtrend that commenced in Oct 08; bearish candles were seen within the last 5 days (shooting star and doji).

Chart

Trade Entry: AUD/USD Short Position, 14-Jan-09

(Re-entry)
Security: Spot FX (mini) AUD/USD
Direction: Short
Opening Price: 0.66721
Contract: 1 (mini)
Opening Contract Value: A$10,000 (US$6,672.1)
Limit Level: 0.64721
Stop Level: 0.68721
Amount Risked: A$260
Interest rate differential fee: -4% p.a.

Technical Justifications:

1. Upcoming economic data expected to deteriorate and lead to a bearish AUD/USD.
2. Candlestick analysis shows bearish signals confirmed within last few days.

Trade Entry: USD/JPY Short Position, 14-Jan-09

(Trade Re-Entry)
Security: Spot FX (mini) USD/JPY

Direction: Short
Opening Price: 89.30
Contract: 1 (mini)
Opening Contract Value: US$10,000 (Ұ955,400)
Limit Level: 86.30
Stop Level: 91.80
Amount Risked: US$250
Interest rate differential fee: -0.15% p.a.

Technical Justifications:

1. US economic data expected to worsen (Consumer Credit, Non-Farm Payrolls), see this article.
2. Technical strategies indicating breakout to the bearish side, see this article.
3. Bearish candlestick daily chart patterns observed over the last week.

Chart

Trade Entry: NZD/USD Short Position, 14-Jan-09

Security: Spot FX (mini) NZD/USD
Direction: Short
Contract: 1 (mini)
Opening Price: 0.55668
Opening Contract Value: NZD$10,000 (US$5,566.8)
Limit Level: 0.52668
Stop Level: 0.57668
Amount Risked: US$200
Interest rate differential fee: -4.75% p.a.

Technical Justifications:

1. Standard & Poor’s warned that it could downgrade the country’s foreign currency debt rating, sending the Kiwi dollar on a downward spiral against other currencies; and NZ central bank expected to cut rates by at least 100 basis points on January 29, see here.
2. Recent bullish rally fail to break resistance level of 0.6000, and bearish trend developing.

Chart

Opportunities Missed!

I entered into 2 Forex trades on 09-Jan-09 (short AUD/USD, and short USD/JPY). The technical justifications for these trades turn out to be accurate and the trades moved in the correct direction, as predicted. It produced profitable results; but, I just got out way too early!

I exited both these positions after less than a day of openning them and it made a meager A$93 of profit. Had I kept them until today (only 3 days later) I would have made 10 times more - a whopping A$900 in profit! Bummer!

I am kicking myself now and wondering why I got out... Actually, both currency pairs became quite volatile at the time of exit and I didn't want to lose the profit. So, it was the fear of losing money that made me close these really profitable positions (with the benefit of foresight of course).

Oh well, at least I made a bit of money. Nothing worst than losing money. Here are the charts.

Spot AUD/USD Daily Chart:

Spot USD/JPY Daily Chart:

• A lesson for the future is to stay in the trade if the technical justifications for entering the trade is still valid and the stop loss levels have not been hit.

Trade Exit: AUD/USD Short Position, 10-Jan-09

Exited Short Position in Spot FX (mini) AUD/USD
Closing Price: 0.70646
Opening Price: 0.71198
Contract: 1 (mini)
Closing Contract Value: US$7,064.6
Opening Contract Value: US$7,119.8
Profit: US$55.20 (A$78)

Justifications:

• Take profit

Trade Exit: USD/JPY Short Position, 10-Jan-09

Exited Short Position in Spot FX (mini) USD/JPY
Closing Price: 91.431
Opening Price: 91.540
Contract: 1 (mini)
Closing Contract Value: Ұ914,310
Opening Contract Value: Ұ915,400
Profit: Ұ1,090 (A$15)

Justifications:

1. Protect eroding profit
   

Trade Entry: USD/JPY Short Position, 09-Jan-09

Security: Spot FX (mini) USD/JPY

Direction: Short
Opening Price: 91.54
Contract: 1 (mini)
Opening Contract Value: US$10,000 (Ұ955,400)
Limit Level: 86.54
Stop Level: 94.04
Amount Risked: US$250
Interest rate differential fee: -0.15% p.a.

Technical Justifications:

1. US economic data expected to worsen (Consumer Credit, Non-Farm Payrolls), see this article.
2. Technical strategies indicating breakout to the bearish side, see this article.
3. Bearish candlestick daily chart patterns observed (shooting star and confirmations) over the last 3 days.

Chart

Trade Entry: AUD/USD Short Position, 09-Jan-09

Security: Spot FX (mini) AUD/USD
Direction: Short
Opening Price: 0.71198
Contract: 1 (mini)
Opening Contract Value: A$10,000 (US$7,119.8)
Limit Level: 0.6700
Stop Level: 0.7380
Amount Risked: A$260
Interest rate differential fee: -4% p.a.

Technical Justifications:

1. Latest economic data (housing data) points to bearish AUD/USD, see this article.
2. Candlestick analysis shows bearish signals (Hanging Man and Bearish Candle confirmation), see this article.
3. The AUD/USD reached initial resistance from the confluence of the October 14th high / 38.2% of .9856-.6005 at .7247/56, see this article.

Chart