Magical 64 pips

I started my first trade on my trip to my meeting on the train! I captured 64 pips on GBP/USD.

GBP/USD - Long @ 1.9516, Closed @ 1.9580 (64 pips)

After closing the trade, I tried my 'straddle' forex strategy. Today the strategy failed me as I placed my stop loss too close. If I extend 5 more pips on the Long trade, I could have profited another 64 pips!!!

GBP/USD
Short @ 1.9580, Closed @ 1.9607 (27 pips)
Long @ 1.9584, Closed @ 1.9554 (30 pips)

'Straddle' Forex Win - 55 pips

I was with my PDA at Raffles City Fountain and I was waiting for the signals to trade my favourite currency pair - GBP/USD.

As I was quite impatient to wait for the currency pair to give me the exact indication to enter the trade, I resorted to using Straddle* method and exited with a net win of 55 pips.


GBP/USD
Short @ 1.9570, stop loss 43 pips, Closed at predetermined profit take 1.9500 (+70 pips)
Long @ 1.9573, profit take 38 pips, Closed at predetermined stop loss 1.9558 (-15 pips)
55 pips win


* Straddle is basically an Options trading strategy to trade options when you don't know which way the stock will head but you know it will move big magnitude in one direction. And thus, you buy a call option and a put option at the same time. You may lose on one option, but you win more on the other option.

First Straddle Win!

During the recent moody subprime happening, financial companies like Lehman Brothers (LEH), Morgan Stanley (MS), Goldman Sach (GS) and Bear Sterns (BSC) are expected to swing their stock price violently when they announce their quartetly earning report face-to-back this week.

Anticipating the swing of the stock price of Lehman Brothers (LEH) on Monday night, I entered the Straddle trade on Sep 60 Call ($1.90) and Put ($3.20). LEH announced their earning on Tuesday before market open and open with a gap up of $1.36. But surprisingly, both call and put options depreciated in value (call $1.55 and put $2.00) when market opened on Tuesday morning.

But I closed the put option when I see a steady rise in the stock price at $1.20 (ya, a loss of $2.00). And the great news was definitely the announcement by Fed chief to reduce rate at 2.15pm ET and the stock continued to rally more than $5 from previous close. At around 3.40pm ET, I closed the call option at $4.60 before market close.

No doubt the put option loses $2.00 of my bought value, it was the call option that brought me the glory by rising $2.70 in value! This resulted in a $0.70 profit (13.7% out of $5.10 that cost me on Monday).

Using Straddle strategy, it was the 'insurance' that I can profit no matter which direction the swing of the stock price.



Great! My first Straddle and first Straddle win!