Market commentary

14.30 gmt

This week is coming to a close, I only have the EURUSD short open. I plan to close it before Europe closes. Although the system is firmly short all the trades, I will over-ride the system in judging event risk. I understand why most professional traders close trades over the weekend. Besides avoiding event risk, it makes the weekend more enjoyable if I don’t have to worry about open trades.

The account has already more than doubled in this week, not including the open short EURUSD trade. I’ll have an updated worksheet done tomorrow. It feels good to see patience and discipline getting rewarded. Lately as I focus more on my trading and less on the money, the results are better.  I hope this trend continues, in a virtuous circle of positive feedback.

On to the markets.

First, I want to talk about the AUDUSD. Although it behaves quite well as per the system, the moves have tapered down to such small ranges that it is not interesting anymore to trade this pair. I might enter a trade if I get a good entry with a long-term goal of 100-200 pips. I have a limited account, and to make some reasonable dollars from a AUDUSD trade requires large order size. But that means a high proportion of the account is blocked up in the margin. That is why I prefer to trade liquid and reasonably volatile pairs.

The Yen pairs are where the action is these days. It wasn’t like this for the past many years. I missed most of the rapid rise of USDJPY and EURJPY which happened between 20 December and 2 January. I suffered some losing trades as I tried to jump in, but fortunately I was saved from serious disaster. I waited, knowing that there will be great opportunities when the trend pauses or turns. And we are in that phase now.

The last 2 day’s price action leads me to believe that we will see a deeper correction in the yen pairs over the next few days/weeks. But there was surprising buying strength, especially in USDJPY so there is a risk of a swift reversal in these pairs. That’s one reason I am taking profits and closing my trades today. The other reason is the weekend risk. Although we may see a deeper correction, it will be two-way traffic from here on. The days of easy money in the one-way traffic are over.

Perhaps more commentary later in the weekend.

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