P&L Running Total - b/fwd Nil - Today Nill - c/fwd 1R Loss
I have been a little slack with my FX articles. When I was able to trade FX for real money I had a much more dedicated approach - now I just look from time to time but I will endeavor to get at it a little more often.
Having said that - one of my constant problems with FX is to be right at the wrong time. So I would buy, get pipped out, then watch while the pair rose - rinse and repeat. That can be very annoying but, worse than that, it chips away at your mental capital making it harder and harder to trade profitably.
A method I have used on stocks in the past was to buy calls during dips then sell them once I hit a decent return. I actually did quite well at this probably around 10 years ago but have since given it up because I wasn't making enough for the risk taken. This was primarily due to trading these options in Australia with expensive brokers and pretty ordinary market makers.
So I was looking at the Aussie yesterday and thought "why not try the same tactic on FX?" Take a look at this chart
I see the Aussie on a nice up trend with a decent dip (note, this is today's chart but it hasn't moved much since I priced the option) . I could just run out and buy Aussie but NFP is just around the corner etc etc so I looked up the at the money call
So lets buy a call spending 1R. It's costing me 20.1 and expires 18th June. I can't lose more than I spend and I have the best part of seven weeks to see if I am right.
DisclaimerI am not a financial adviser. These are paper trades. I am not suggesting you follow these signals. If you take any action based on my blog you do so at your own risk.
