Friday was a big day for news, both economic and political.
The big plunge in the USD/CAD was not USD weakness – it was strength in the CAD following extremely strong economic numbers (employment change, unemployment rate, and GDP m/m) reported at 8:30 am (New York time).
The plunge in USD just after 11 am (NY time) was due to the political news that General Michael Flynn has agreed to cooperate with Robert Mueller’s investigation of Trump/Russia collusion. This is a tempest in a teapot, but it roiled the markets (including the US stock markets), in no small part because of gleeful pot-stirring by the mainstream media.
All this will be over by next week, but the damage has been done to my test of the Grumpy Strategy.
Much wider stop-losses would have prevented the stop-outs that occurred today, but that can be said in any scenario in which a stop-out is followed by a return to trend. So, I don’t think today’s crazy activity sheds much light on the question of where, exactly, to place stops for the best results in this strategy.
That being said, I think placing 100-pip trailing stops on all pairs (except the USD/minor pairs, which need more room) has strangled several trades. So, I have changed all my stops (except the minors) to fixed 100-pip stops (no trail).
My brand-new USD/MXN long, entered just yesterday after 5 pm, got stopped out in the 11 am USD-plunge today. This pair is weird, and maybe I should remove it from my watch-list. The daily ATR(14) on the USD/MXN fluctuates between 1,700 and 2,000 pips – that’s not a misprint – average swings of up to 2,000 pips per day. I had a 1,500-pip stop-loss on the pair, and got nailed. The USD/MXN still looks like a good long entry, and looking at a normal (daily) candlestick chart, you might say, “So, what’s the big deal, just re-enter long”. But, I sure don’t want to take another 1,500-pip hit on this pair (or any pair). Maybe going commando (no stop-loss, at all) is the only solution for the buck/mex (and maybe the buck/yuan, as well).
Enough of the post-mortem.
Here are today’s metrics at the close:
Open trades from yesterday (Thursday, November 30) - 10 trades
(out of 20 trades that were open 24 hrs ago)
EUR/USD (long) - previous cross
AUD/USD (short) - crossed
NZD/USD (short) - crossed
AUD/CHF (short) - previous cross
AUD/JPY (long) - crossed
AUD/NZD (long) -
CAD/JPY (long) - crossed
CHF/JPY (long) - crossed
EUR/GBP (short) - crossed
NZD/CHF (short) - crossed
Unrealized P/L = 170 pips profit
(prior to adding new trades signaled today or Sunday)
Closed trades (since yesterday) - 10 trades
USD/CAD (long) - stopped out
USD/CHF (long) - stopped out
USD/JPY (long) - stopped out
EUR/JPY (long) - stopped out
EUR/NZD (long) - stopped out
GBP/CHF (long) - stopped out
GBP/JPY (long) - stopped out
GBP/NZD (long) - stopped out
USD/CNH (long) - stopped out
USD/MXN (long) - stopped out
Realized P/L = 371.6 pips profit (since the start of this test)
New trades signaled today (Friday, December 1) - 2 trades
(trades will be placed at the Monday open - 5 pm Sunday NY time)
AUD/USD — SAR signal to go long
NZD/USD — WMA5 signal to go long
The rest of the pairs will be reviewed for signals on Sunday.
Current status of this test: 10 open positions
(trades will be held open over the weekend)