US Down Credit Rating Downgrade – GBP/USD 08/08/2011
Today was the first day back after the downgrade of the US credit rating. I wrote on a question in yahoo answers about what will happen to the EUR/USD as well as the GBP/USD. As I mentioned over the weekend more than likely the forex market would sell off towards USD strength. I did not however expect the gap up which was a bit of a surprise to me. By the time we got in the forex trading room for the NY session however the EUR/USD and GBP/USD had already started to move down as expected.
Therefore I was a bit more enthused about getting short on either the GBP/USD or the EUR/USD. It took a while but eventually we had a beautiful setup to go short on the GBP/USD. The GBP/USD came back into the 1.6350 area and made a smaller double top on the 5M chart. Once we hit this level again it then gave a nice volume and price action based entry short that meet our forex trading strategy criteria exactly. We took a short around 1.6344 and closed half at +20 and the other half of the trade was closed at +30 pips. This was a nice trade overall, and it added to our profit for the month.
For the last few weeks we have been focusing on patience in the day trading room. Not because we want to focus on that but because we have had no choice. Lately even for forex day traders using smaller time frame charts patience has been king to the difference between being the mouse caught in the trap, and making a nice profit. Plain and simple volatility has made day trading forex a bit more unpredictable. Because of this YOUR selectivity in choosing which trades to take will make the difference, and that very simply boils down to patience….the patience to wait for what you view as an “above average” setup based on your forex trading system. This will give you the best chance of success. I hope everyone else is doing well with these larger swings and increased volatility. If you would like a different perspective on the market come check out our Day Trading Forex Course.