Whats the old trading adage, ‘don’t try catch a falling knife?’. Weirdly, there is no aphorism for whatever the opposite for that is. At least not one that I know of…
Massive bursts of exuberance in an upward direction don’t carry a pithy observation… they’re just referred to as spikes. Which is a lot less colorful. And somewhat sad, that they don’t get their own thing I mean…
GBP/USD spiked more than 200pts yesterday afternoon after Boris Johnson and Leo Varadkar met, and Mr. Varadkar had something positive to say about their meeting. Of course you can’t really trade this. Well… I suppose you could (with orders above and below the current price, ie in case Mr. Varadkar had mouthed off something less optimistic). Or maybe you were long on this already and you just got lucky. Or maybe you even decided to be gutsy and hopped aboard somewhere in the middle. (even though this makes me suck air through my teeth, with such crazy momentum… well… it probably worked out for you)
I was done for the day when this all happened. Its rare for me to trade late into the afternoon (because I get tired and inattentive). My last trade was at 14H22. It was a short trade and it started going against me. I closed that position just before I got stopped out for a profit of £15.40 and decided I’d done pretty well for the day and decided to call it.
Of course if I’d kept my position size, been long… without a limit… and I took it off somewhere right near the top… I would have made £3000.00 in a single trade. Which likely would have made me quite cheerful.
That’s a lot of ‘ifs’. And really, this is not how I roll. I need to remind myself of this now and then. I am like the proverbial tortoise. Slow and steady. And you need to be comfortable in your… eh… leathery skin and armored exterior.
The downside (for me at least) is that this spike has pushed the Cable into no-mans land. Which makes it harder to trade today because it needs to settle into its new location first and define new areas of support and resistance. Plus its a Friday… and Brexit stuff makes everyone a little twitchy.
My tactics today (at least initially) are to bounce off softer support and resistance and take profit between 5 and 8 pips. Hopefully that builds up a bulwark of profit that… I was going to say, that I can use to take on more risk as the day progresses. But really, I will likely play it quite conservatively today and grind out a win for the week.
Now I just need to listen to my own good advice….