The long position we initiated on May 17, 2008 using a new technical and fundamental indicator available, is now starting to pay off for us. With the GBP/USD breaking above the 1.9850 level this week, it has put the pair in a technical uptrend with average momentum.
All in all, the The Deutsche Bank US Dollar-Short Futures Index - ($USDDNX.X) has proven to be a useful tool to keep in the traders toolbox. Remember; this indicator shows us the pressure being put on the USD. As the chart climbs upward, more investors are betting the USD will decline in value against major currencies. We can also use this index as an exit indicator for our current trade when it shows an overbought condition.
Our entry was at 1.9475 and we added to our position as the consolidation formed at 1.9540 on Jun 6, 2008. Our stop has always been steady at 1.9361. We are now going to raise our stop to lock in profits and protect our position. We have it set at 1.9580. We will let this trade play out through the current uptrend, adjusting the stop as necessary.
You should now have a good feel for how to conduct a trade using the USD - Short Futures Index as an indicator. If not, feel free to re-read the blog posts beginning May 17, 2008. This indicator should not be your only trigger to execute a trade (fundamentals were working in our favor if you remember earlier posts). Trading Forex is risky and should only be done with funds dedicated for risky investments.
We mentioned in earlier posts about monitoring the major banks foreign currency levels as another trading tool we use, so we will post in later blogs about using just that to exit this current current trade. In the mean time our next few posts will be on aspects of leverage in Forex trading.
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Friday, June 27, 2008
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1 comment:
One of the benefits of Forex trading that is loved by traders is the 24-hour trading schedule. Engaging in foreign exchange trading is therefore really convenient, and, no matter where you are and in whatever time you prefer, you can access your account, perform your analysis, make the necessary changes, and so on.
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