It was a wild week in forex, and I had a decent week #2 with my range-based EUR/USD trading system. As you recall, the idea is to pick a range-based entry into EUR/USD and immediately enter a 50-pip limit 120-pip stop. The idea being that if you are going to risk 120 pips on a trade, you have to make at least 50-pips on profitable trades to keep a decent chance of making any money. Keeping that ratio, if you win on 3 out of 4 trades, you will make money.
The week started off well with good range-trading conditions from Sunday evening EST until Wednesday AM. By Wednesday I had bagged 296 pips for the week with with 6 straight winners. I knew the US Fed news was due at 2:15 EST on Wednesday. But since they had already cut rates to 0%, what else could they do? Besides, EUR/USD looked pinned at 130 even. Having made money on both sides of 130, I went both long and short EUR/USD at 130 with a 50-pip limits on either side. Plus I had an order to go short at 130.80 from earlier in the week.After the Fed news came out, EUR/USD had a huge 1-day rally and printed as high as 135 on Wednesday. I took a profit on the long position from 130, but got stopped out of both the short position at 130 and again on the short position at 130.80. Even so, based on the profit/drawdown ratio, I was still netted 160 pips for the week even after the two 120-pip drawdowns!
Thursday was a consolidation day and I managed to pick up another 50-pips. By Friday, excellent range-trading conditions had returned and I pulled out another winner. What the record doesn't show is that I went long again at 136 and came about 2-pips from taking another winner at 136.50. I stayed with that position and EUR/USD went out at 1.3563, down about -37 pips from my long entry. I'm hoping to see 136.50 (limit) before we see 134.80 (stop). We will probably have an answer by Monday morning EST.
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