cateful posted:
    I'll try to explain a live example. Right now I'm starting to get interested in the euro pound cross. It has been trapped in a 300 pip range for the past three months. It was in a 700 pip range for 4 years before it broke loose in 2007. There will be a rate decision later this week and there is very little chance that they would raise rates. Right now I'm clueless as where it's going like everybody else but if you stick a gun to my head I would probably say it is going to break down rather than up. But most likely it will do nothing and sit there just like it did in 2003-2007. There are people looking for parity on this pair but I just don't see that happening in the current environment. My bet is that ECB will lack behind BOE in ending crisis measures and starting to raise interest rate. I need more information before making a decision to start a campaign on pound sterling. I will have no problem flipping to the long side if new information comes out supporting this view. But now my view is mostly balanced with a slight downside bias.


See original post here: http://www.myfxbook.com/community/general/open-trades-locked/11677,1#?pt=2&p=3&o=11677

I think a breakout is going to happen very soon now. My bias is to the downside. Therefore I consider any price above 8850 a good price. I have an initial ticket booked at 8970+, I am looking to add a second one on reactions should the cross move lower. My aim is to have a modest position with good starting price above 8850 while simultaneously manage my risk exposure to the minimum before the real move starts. If it breaks up the previous high (which I hope will not happen lol) I will reduce my position quickly and re-evaluate the compaign. I stand to lose 50-100 pips per bar if it breaks up but will make a lot more if it breaks down. My event risk at the moment is the ECB rate decision tomorrow which again, I expect they will leave the rates unchanged but the conference after the decision could prove to be a mover. I expect them to continue QE program, mention there is very little inflationary risk, and there may be a discussion on Greece.

Also another trade I am looking at is the EURAUD cross which is not as liquid as the european crosses but still an active pair. Technically it is at a strategic price between 1.55 and 56. This is a multi-year low. It touched this price on numerous occasions in 1997, 2004, 2005, and 2007. If this level is breached it will be at a 10-year low. Right now the information I have on hand suggests there is a good possibility this might happen. However I am not quite confident about this at the moment. Will need new information.

yes, any profit is still a profit.

why did you expect it to move 100 pips?

cateful posted:
Because that's what it does usually when it reacts.


obviously i didn't read the previous posts, sorry..

so basically it's a straddle strategy after a high volatility news event?

EURGBP trade is still on, I waited a week for that reaction upwards to 8800 only end up missing it since the reaction high was 5 pips from 8800. Anyway I still managed to add a small position around 8700ish. This happens a lot. Don't like it but have to live with it.

Now that the pair is below 8700 I am making a very nice return on this compaign. Will update when I close it.