Friday, September 6, 2013

The US dollar, the Euro and gold

On Monday last (2nd September) we alluded to the strong possibility that US dollar strength would result in a fall in both the Euro and gold ("The US dollar sticks to the script"). Both of these things have come to pass, and we are particularly pleased that they happened in the manner discussed in the blog post. 

As a result, on Monday we set the Silver Trigger algorithmic routine to take only short trades in gold, should the pre-defined momentum trigger come to be present. The routine did nothing until yesterday, Thursday, when the ADP payrolls report, which is a front runner for the official Non-Farm Payrolls report, due out later today, provided the required impetus. Three hours later the trade was in sufficient profit (1% of equity) to allow for half the position to be taken off and the Stop-Loss order moved to break-even. 

We now have a free trade with the other half of the position, and we have locked in some profit. 

This situation defines the idea of trading with tranquility. It also highlights the importance of not being in the market unless there is a compelling reason to have a position. But the really satisfactory thing about this example is that the placing and management of the trade all happened when we were out for the day and the trading platform was unattended. The Omicron FX Silver trigger algorithmic routine was waiting, with infinite patience, to make its move when the time was right.

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