Special Consultant to the FPA
Really interested by your tactics. The fact that you can dispassionately take a loss like that is a clear indication of why you are so successful.
You went short because of the bearish comments of Paul Fisher. What persuaded you that that bearish sentiment had disappeared?
Playing Devil's Advocate:
Aren't BOE officials going to continue to talk the pound down?
Is the dollar not due to rise, perhaps not next week but when tapering schedule is clear?
GBPUSD 7 month high is 1.5750. This is the third time it has been tested. Why do you think there's a real risk it will break?
As you've probably guessed, these are the thoughts dominating my thoughts re my ongoing short position!
Please definitely play devils advocate! .... Posting here actually helps me to clarify my own thoughts on the markets and even more so when you guys ask questions and sometimes even challenge what i'm doing
Regards taking a loss, I base it mainly on how I'm feeling .... Some trades will run against me but there is nothing to change my mind so I will hold and re-enter and feel completely in control and sleep soundly.... I will also know which other prices I anticipate the pair reacting from in favour of my trade.
Other trades (like this one) move against me and I CAN see a reason why, which causes me to feel 'out of control' and I start to 'hope' the price just moves in my favour ... The minute I feel like this I'm out!
I have all the same emotions as I did when I was learning, but I have trained them to become signals in themselves (If that makes sense?)
The comments should have caused the move down during the session, but instead the markets focused on the buyout deal from GSK and comments from the Chancellor .... So to be perfectly honest I made the wrong call and focused on the wrong thing. As soon as I realised this, my conviction was gone.
With regard to your BOE points:
Yes they are still talking the GBP down, the problem is that traders don't believe them .... Mark Carney did similar in Canada and then raised rates anyway, so this is influencing traders current thoughts. So because the markets are not really buying the BOE talk, they are focusing on the fundamentals which lately have been fantastic, with a string of data from the UK showing good recovery.
Medium term the USD will rise, IF they start to taper, particularly against currencies that are still printing money (Japan & UK for example) So this is not really in doubt, but we just have to tackle the volatility in the mean time.
With regard to the GBP/USD high ... Right now there is no real thing happening (Traders focused on UK fundamentals, Tapering has not yet started) to cause the pair to drop significantly.
So at this point I simply do not know what it will do next. And until we get something solid that lines up with everything else I will tend to avoid the trade. It is a bit too mixed in the short term.
Hope that helps!
Ofcourse if you need anything else just let me know
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