It seems like Europe has been in the news a lot lately, hasn’t it? Once we can see some stability in the region regarding the PIGS I believe the Euro wil see support all the way to 1.41. The PIGS are Portugal, Italy, Greece and Spain. They seem to be the weakest in the Euro Zone and the cause of most of the fears. The European Financial Stability Facility is the rescue fund that is proposed to keep the countries a float. Mostly by buying bonds. It looks like default is expected for Greece in mid-December so the next few weeks will be an interesting time to trade.
To day my trade is long the Euro. I entered on the 1 hour chart, seeing support with the 200 EMA. I frequently use the exponential moving average to enter a trade and I will often use multiple time frames to pinpoint the best timing. If I see a good set up for a long on the daily chart, I will drill down to a smaller time frame to try to get the best entry point. Today it happened to be the hour chart. So we’ll see how the US trading session takes the news. I’d like to be out of this trade today because I’m not a fan of the weekend trade. You never know how the markets will open on Sunday and some brokers do not allow you to trade or the spreads are crazy expensive even if you were allowed to. That only worked in my favor once when I had an Aussie trade open over the weekend. Sunday showed a big pop and I was out before dinner.
Anyway, we’ll see how this trade goes. Oh yeah, I’m puttiing a pretty tight stop on because I’m not sure how much higher the positive news will carry. And tight limit as well. Entry is 1.3585 and stop is 1.3521. Thats a potential loss of 64 pips. I won’t use a trailing stop with it that tight. The volatility is easily 60 pip swings so no need to get stopped out with a large order. Limit will be at 1.3686 or just under 1.37. That’s potentially 100 pips. I always keep my risk to reward more to the positive side. There’s only two ways the market can go, up or down. So since I am expecting the market to go up I have a 50% chance that it will go up. The best practice is to win big when you win and lose small when you lose. That’s how you live to trade another day.