Thread: Discuss the GBP/USD with a DailyFX Analyst

Originally Posted by Terri Belkas

Not sure where your party hat is, but I've got some confetti.

Have to say though Terri that if cable hadn't turned at 2.0115 it would have been more a case of christmas stuffing than christmas partying.

hi teri
we are glad to have you back.
i am stuck on the buy side with 4 contracts with march expiry on the futures, 203.30
i am thinking of holding on as i have time untill march. i was thinking of averaging another 3 contracts between the 198 - 200.00 levels and get a total of 5 contracts, hoping for atleast a 300 - 400 bip rebound anytime before March. what u think ?

any suggestions would be extremely appreciated, ?
thanks a bunch and god bless !!

although a few may disagree i dont think averaging down is such a great idea ,it just means yr entry price was poor.Although noone has a crystal ball on any currency pair from what i can see on the pound its at a critical support on daily chart if this support breaks it would mean a multi month uptrend coming to an end so averaging down id say is the last thing you wantto be doing especially if we end up in the mid 1.90s.

if these levels hold ,there is hope in a retracement to levels around 2.0300 as i can see on fibs and id just get out there and hope to get in at a better price next time with better risk /reward levels.

im looking at a few options and a retracement to around 2.0315 is one of them to sell gbp ,but it might not happen so im keeping it open and just looking at the charts to guide me.

Originally Posted by manglanimanish

hi teri
we are glad to have you back.
i am stuck on the buy side with 4 contracts with march expiry on the futures, 203.30
i am thinking of holding on as i have time untill march. i was thinking of averaging another 3 contracts between the 198 - 200.00 levels and get a total of 5 contracts, hoping for atleast a 300 - 400 bip rebound anytime before March. what u think ?

any suggestions would be extremely appreciated, ?
thanks a bunch and god bless !!

Ouch, that's a sticky situation to be in. At this point, I'm not 100% confident that we'll see a large rebound to a level that will make your position profitable, especially if the pair breaks down below trendline support and 2.01.

After breaking through the 200-Day SMA, it looks like we can be heading straight down to the 1.96 handle before we see any major resistance, there we will run into the low from 8/17 and the 38.2% Fibo of 1.7260-2.1165

Originally Posted by Terri Belkas

Ouch, that's a sticky situation to be in. At this point, I'm not 100% confident that we'll see a large rebound to a level that will make your position profitable, especially if the pair breaks down below trendline support and 2.01.

A agree with Terri. Support is pretty sturdy around 2.1 (an 18-month rising trendline and 200-day SMA), but any subsequent rebound has limited potential unless we have some major shift in positioning and/or there is a major risk event.

If you want to hold on to your trade at current levels, I would immediately put a stop loss on the position so that you do not incur an any more severe loss (perhaps below 2.01). If you are stopped their, you can reanalyze and see if it was a false break and get in at a better price for a rebound to a level that is more likely to be achievable (2.025-2.035) or you can flip your position if you think the break of that trendline is a major change in trend.

Don't forget to always put in a stop loss. Whether you put it on the trade as an order or you just keep it in mind, a stop is perhaps the most important rule in money management.

i am extremely pleased with the feeedback from John and teri and would like to thank you.

Also i would appreciate if you can advise me on my concern for stop losses on the pound. Since i got a March contract and knowing the extreme volatality with the pound i was tempted to hold on and exit with less losses, if not profit out of it.
also in the future if i do set stop losses for the pound, the volatality may make me regret squaring off, - so perhaps in that case i can set big stop losses for the pound, is maybe what i want to go with then inorder to get disciplined..and then take fresh positions. plz let me know if i am off track here.

again looking at the cpi tomorrow, and the retail price index to be leaning in favour of the pound and housing permits and starts against the dollar, keeps me optimistic on my long holds.

really appreciate all ur feedback.
rgds/
mani

Originally Posted by manglanimanish

i am extremely pleased with the feeedback from John and teri and would like to thank you.

Also i would appreciate if you can advise me on my concern for stop losses on the pound. Since i got a March contract and knowing the extreme volatality with the pound i was tempted to hold on and exit with less losses, if not profit out of it.
also in the future if i do set stop losses for the pound, the volatality may make me regret squaring off, - so perhaps in that case i can set big stop losses for the pound, is maybe what i want to go with then inorder to get disciplined..and then take fresh positions. plz let me know if i am off track here.

again looking at the cpi tomorrow, and the retail price index to be leaning in favour of the pound and housing permits and starts against the dollar, keeps me optimistic on my long holds.

really appreciate all ur feedback.
rgds/
mani

Hey Mani,

It's true that spot can rebound after hitting your stop, but it is better to be safe than sorry. If the pound does drop below a certain level and continues to drop, you will suffer a much greater loss than with a predetermined stop. You should treat your trading career as a potential for returns with certain probabilities for losses - how much you lose is really the only thing you can control in this game. Each trade should not be a home run, as such trades can be devastating if the losses are of equal magnitude.

Also, if you are stopped out, but the pound starts going in your favor again, you can always jump back in. This may seem like it is taking too many trades, but it really helps most people psychologically and is just good risk management to take small losses and let your winning trades run (hence the axiom). It is true that if volatility is higher, you should probably widen your stop; but no matter the volatility, always have a stop.

The ratio of long to short positions in the GBPUSD stands at 1.24 as nearly 55% of traders are long. Yesterday, the ratio was at 1.45 as 59% of open positions were long. In detail, long positions are 0.2% higher than yesterday and 67.8% stronger since last week. Short positions are 17.2% higher than yesterday and 5.5% stronger since last week. Open interest is 7.1% stronger than yesterday and 21.4% above its monthly average. The SSI is a contrarian indicator and signals more GBPUSD losses.

Source: FXCM Execution Desk

For historical data and the latest charts based on the SSI please visit http://www.dailyfx.com/story/special...140917987.html

For information on an FXCM Managed Fund that takes advantage of the SSI, please review our Sentiment Fund at: http://www.fxcmmanagedfunds.com/ or call +1 646-432-2968.

Originally Posted by Antonio Sousa

The ratio of long to short positions in the GBPUSD stands at 1.24 as nearly 55% of traders are long. Yesterday, the ratio was at 1.45 as 59% of open positions were long. In detail, long positions are 0.2% higher than yesterday and 67.8% stronger since last week. Short positions are 17.2% higher than yesterday and 5.5% stronger since last week. Open interest is 7.1% stronger than yesterday and 21.4% above its monthly average. The SSI is a contrarian indicator and signals more GBPUSD losses.

The GBPUSD reading is definitely interesting. On the one hand, the larger percentage of traders who are long suggests that GBPUSD risks remain very much to the downside. Yet we see that short positions have surged by 17.2% on the day--quite the bullish signal in and of itself. Outlook is relatively unclear for the pair, but if I had to point to a direction, I would be tempted to say that a bullish bias is warranted. This will be moreso the case if we see that positioning flips back into net-short territory.

Originally Posted by John Kicklighter

Hey Mani,

It's true that spot can rebound after hitting your stop, but it is better to be safe than sorry. If the pound does drop below a certain level and continues to drop, you will suffer a much greater loss than with a predetermined stop. You should treat your trading career as a potential for returns with certain probabilities for losses - how much you lose is really the only thing you can control in this game. Each trade should not be a home run, as such trades can be devastating if the losses are of equal magnitude.

Also, if you are stopped out, but the pound starts going in your favor again, you can always jump back in. This may seem like it is taking too many trades, but it really helps most people psychologically and is just good risk management to take small losses and let your winning trades run (hence the axiom). It is true that if volatility is higher, you should probably widen your stop; but no matter the volatility, always have a stop.

Mani, I second what John mentioned. Getting stopped out is never fun, but knowing exactly what your losses will be is a far more prudent strategy.

Originally Posted by davetheeagle

Closed out half my position at 2.0125. Stop in place at 2.0200 and further sale order at 2.0100. Now where's my party hat?

OK short at 2.0100!!!! My stop didn't take account of my sale order being hit.

Amazing how it just managed to briefly touch that low. Will add at 2.0150 if cable slides again.

Originally Posted by davetheeagle

OK short at 2.0100!!!! My stop didn't take account of my sale order being hit.

Amazing how it just managed to briefly touch that low. Will add at 2.0150 if cable slides again.

David pound may bounce to 2.0300 if the CPI data is hot. No doubt sentiment is very cable bearish but the pair can have massive retraces. We think 2.0000 is in sight but the journey there will be bumpy.

Originally Posted by davetheeagle

OK short at 2.0100!!!! My stop didn't take account of my sale order being hit.

Amazing how it just managed to briefly touch that low. Will add at 2.0150 if cable slides again.

you are a brave warrior! Good luck!
I am waiting for .0290/.0340 area to short again.

thank u john and teri for the very valued advise.
i cannot square off now and shall average below 201.00 on the long and swear to myself that this is the last time i am operating w/o stoplosses, and hopefully before march i shall be able to square off.

thanks a bunch guys.