Trade Update - GBP/USD Short

The Trade: GBP/USD Short

Date: April 11 2008, 9:30am
Entry: 1.97011
Lots: 5
Stop Loss: 1.97511
Target: 1.96511

Reason/Setup:
This trade was entered based on the squeeze play setup on daily charts. I entered the trade as soon as the signal was given. I had initially placed a 100 pip target and 50 pip stop for this trade. I later changed it to just a 50 pip profit since I didn't want to get too greedy and end up losing money. The chart below shows when the entry was made.


Result:
On Friday after I entered the trade, the pair slowly moved down and I had closed the day with a small profit. But the trade was still open. When the market opened on Sunday evening, almost all USD pairs had gapped down big due to the comments from the G7 meeting. Apparently all european banks had decided to support the dollar. Anyway, I was up little more than 40 pips on this pair, but I was still waiting for it to hit the 50 pip target. Unfortunately, that never happened. Like it usually happens, the pair moved up to close the gap and proceeded to move even higher. While all indicators pointed to a downward move, the pair continued moving higher. Ultimately, it hit my target point and closed the trade with a loss.

Date: April 14 2008, 1:30am
Total Pips: -250
Profit/Loss: $250
Rating: 4

While I didn't make a profit in this trade, I still followed the signals and money management techniques. Hence I give this trade a 4. Now I have some knowledge on how to pay gaps.

Lesson: If you are in a trade and the pair gaps in your favour, book profits immediately as the pair will look to close the gap.