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Harlosh,

I guess that where you locate your stop has got to depend upon which chart you used to enter the position in the first place and how long you aimed to run it.

For instance, there was a sell signal on Monday on both cable and fiber as the moving averages rolled over on the 1 hour chart. Do you remember my comment to Choccy at the time? If you were trading according to that signal, you'd still want to be short now, 5 days on.

If you take cable as an example, your initial stop would have had to have been just above the high on the 1 hour chart which was at 5pm last Thursday (1.7594). The theory behind that is simple ........ if you've shorted it because you think it's going to come down, it shouldn't then make a fresh high. If it does make a fresh high, it's because it's not coming down and you should not be short.

As cable fell into the middle part of the week and the position moved comfortably into profit, the price action was below the moving averages and, by yesterday, you could draw a falling straight line which touched all the highs of the week. You could then pick a moving average, or the straight line or even a SAR as your trailing stop.

Alternatively, you could just leave your stop at entry for breakeven and look to exit the position manually once you get a contra-signal to the signal which prompted you to enter in the first instance.

You can then take the same principle and apply it to whichever time scale of chart that you choose, be it the 15-minute or 1-minute or whatever. Obviously the faster the chart, the shorter period of time that you'll remain in the position, so you'll have to stay on your toes.

Obviously, some signals on certain charts are better than on others, so you need to find one that works for you.

Something for you currency types. Some is not relevant 'cos its from an institutional perspective and they are prepared to accept paltry "safe" returns but the general conclusions about the trendiness of various pairs illustrated by very simple moving average treatments could be of interest, I thought.

Anyway if you are bored over the weekend :-)

http://www.technicalanalyst.co.uk/trendfollowing.pdf

Hilary,

I appreciate the time and thought you have put into such a comprehensive post. I succumbed today to the psychologically satisfying feeling of taking profits but I know I need to adopt a system for exiting a trade which maximises profit. You thoughts will help me do that. Many thanks.

Robb, I'll take a look. Thank you.

Morning. No positions at the moment but looking.......

morning H from sunny spain! Went short eur/usd about an hour ago (tight stop) watching cable.ps looks like its clouding over

Morning Gfi. Watching cable too.

now short cable, stop fairly tight

JPY strong?

Hilary

Have just picked up your comment on the Australian dollar - thanks.

Note the calendar is showing GMT. And don't forget that US daylight saving time doesn't start till next weekend.

Morning, Hil, sorry, FX Fairy a bit jet-lagged.

You simply can't get the staff nowadays, MM.

:o)

Its a very slow day today

US rate decision tomorrow?

Indeed, Harlosh. A .25% rise is already in the price, imo, but the market is looking for future clues from Bernanke. It's the wording of the accompanying statement which will be of greater interest.

Thanks Hilary. Do they all tend to hold their breath, including non US crosses or is it a purely US thing?

Well I'm long USD/CHF but I may have been a little premature. :-)

Harlosh,

It's probably fair to say that no two months are the same regarding how the market will treat news.

Thanks again Hilary.

I'm a little wary of trading anything today in the light of tonights decision.