By Rob Colville on November 22, 2013 in
Forget keeping the champagne on ice – put that ice straight back in the freezer! Despite being “pipped out” of our first USDSEK sell trade on the 20th November, we had a second chance to sell this Scandinavian pair on the 21st November…but it will take a while to hit our profit target!
Often, it’s a waiting game with targeting trades with a high profit potential.
Trading USDSEK for our first entry (based on the bearish pin bar on the 13th November) and moving our stop-loss close to the breakeven mark of our first USDSEK sell trade, the market FOMC news strengthened the US Dollar against the Swedish Koruna, causing us to exit the trade. My last forex blog post: How FOMC News Affected our USDSEK Trade.
No, trading USDSEK didn’t go the way we wanted or anticipated then. However, yesterday (21st November), we had another entry which gave us a valid reason to sell this Scandinavian currency pair again.
So, we sold it…yet again! After all, our 5 Reasons Why USDSEK Looks Bearish were still valid – if not more so than ever before. We were just unfortunate.
From taking a look at the charts, we could see that the reward: risk ratio was still massively in our favour so we asked ourselves: “what is the worst possible thing that could happen if we took this trade versus what was the worst possible thing that could happen if we didn’t take this trade”.
Yes, we had a bearish pin bar reversal to enter short. Yes, it was still rejecting a horizontal level of supply – both factors signalling to us that the bears had come back into the market…and yes, we had bearish reversals on the lower order timeframes which indicated that the shorter-term traders were “singing from the same hymn-sheet” as the higher order timeframe traders.
We had several other factors in addition to these, giving us a wide-reaching confluence of factors in support of a short for trading USDSEK short.
If we took it for a second time, the worst thing that could have happened is that we lose 1% of our trading account. However, if we didn’t take it then we could have potentially have missed out on a trade with a profit potential of 6%.
With the odds stacked in our favour, we it made business sense to take the trade. We treat our trading very much like a business after all!