Posted by: joetradingplace | March 9, 2015

Holding long and short in same currency

Trend following means finding a trend and following it, it sounds simple, but its a difficult philosophy to follow especially for new and some inexperienced traders. One of my followers on the blog asked me if i hold a long and short position in the same currency. Yes i do, but its not hedging as some traders could think. The reason i hold long and short is because as a trend follower i don’t know when a new trend begins, and i dont know when a trend ends…and no one does. Look at the chart below…Hypothetically, lets say i am short a currency pair and i am in the money, i don’t want to relinquish my position as yet because i don’t know how far price will go down. And now lets say i have a buy signal…i will still take that buy signal, and still maintain my short position….the reason i take the long is because i don’t know if its the start of a new trend…so i don’t want to miss that opportunity if it was a start of a new trend. Looking at the chart, i maintained my short position which then followed through and made me more gains…but i have also taken advantage of the small move up which might have reached my partial profits. You can see how i could have made money in the same currency pair, selling and buying.

Imagine if i had not bought (because i was short biased) and that move up was the trend of the year for that currency, i could have missed a big move for being biased.

Note: Watching Usdcad, looking good for a buy when the current hourly bar closes below BB, will send chart, when I place the trade.

2015-03-09_11-32

 

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Responses

  1. bar failed to close below BB…so trade void

  2. […] at this post before you read https://joetradingplace.wordpress.com/2015/03/09/holding-long-and-short-in-same-currency/ . I mentioned how i can take a short and long trade in the same market, don’t confuse it with […]


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