Friday, January 19, 2007

Journal Entry: Short USD/JPY OUCH!!

Jan. 18 2007 (USD/JPY trade)

Trade: Short 5 lots of USD/JPY @ 120.78.

Stop: 121.05.

Target: 120.05.

Result: Trade stopped-out on Jan. 18 @ 121.05 (-27 pips).

Comments: OUCH. BoJ Governor Fukui's press statements indicating reluctance of BoJ to raise i/r in its Feb meeting hurt me so bad. Lucky for my relatively tight stop at 121.05. Prices shot all the way up to 121.58 during mid-day trading.

The reason why I shorted those 5 lots was because after the news release at 9am Tokyo time, prices increased moderately by around +20pips, leading me to believe that the market has already fully absorbed the news. I next set my eyes on the BoJ meeting in Feb and believed that the BoJ would increase i/r by then, leading to an appreciation of the Yen. HOWEVER, at 3pm Tokyo time, BoJ Governor Fukui released the details of the meeting which had a bearish sentiment to it and indicated the reluctance of the BoJ to even raise i/r in Feb. Before I knew it, USD/JPY blew through my stop to reach a high of 121.58.

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