FXE. How to really trade the euro…

100223fxeIn reality no one could quarrel with our management of the euro trade.  Except ourselves.  We have been spooked three times during this trend and tried to outguess the Basing Point system.  This comes from our dark past of being an FX gambler.

So we thought we should at least show readers how it should have been done, and how it should be done.

So we have marked the chart with the Basing Points and the Basing Point stops.  As you can see it should have been a one trade position, and still should be short.

Let us dissect the trades as a learning exercise.  The first trade, in November, was what we call a no-signal trade. Our economic analysis said that the euro was too high and that it was a limited risk trade — 2% stop over the high.  Of course they spooked us by driving the euro up and we didn’t wait for  the 2% stop so we covered, but on the down gap we kicked ourselves and got short.

This worked all the way into January when a consolidation developed and we drew a line across the top and were spooked when the big guys drove it above that and covered.  They do this to flush undeserving and nervous traders out of the trend.  But we immediately saw it as flushing, and got short again.

That worked until February when we were spooked again and covered.  But once again we saw it for a head fake and got short again.  If any halfway patient trend follower had done this it would have been a one trade position.

Generally we try to inform our readers when we are trading and when we are trending.  We will be a little more punctilious about this in the future.

100223fxe2A close up.

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