I received an email from Ray who wrote:
I went Short on the EURJPY and Long on the EURUSD this morning. I lost on the EURUSD but not on the EURJPY. Is this because I traded before the European news release?
I don’t know which specific news release you referred to, but since you’re trading EUR pairs, I assume you’re referring to the German Economic Sentiment which was in recent European news.
The first thing to note is that a trading position before a major news release does not make it wrong. Most of the time, things in trading are grey, instead of black or white. For example, I advocate placing a stop-loss for every trade. This does not mean that I am right, it just means that I trade based on my experience. So, you can have an ongoing trade position before a major news release, as long as you manage it accordingly. You need to have a trading plan in order to do that. To know what to include in your plan, you may refer to “Question from Baichen: As a new trader, how do I craft a trading plan and start my first trade?” dated 18 Oct 2012.
On a second note, you need to have a directional bias for a currency through analysis. I don’t know how you analyzed the fundamentals and technicals, but going Short on the EURJPY and Long on the EURUSD seems contradictory. This is because the EUR is considered a risk currency while the JPY and USD are considered safe haven currencies. As such, the EURUSD and EURJPY tend to generally move in the same direction. Going Short on one and Long on the other might cancel each other out.
Note that the above is a general guideline. I did not touch on trading specifics such as time frame, determination of entry and exit levels, strategies for different currency pairs, etc. These factors can affect your trading decisions. For example, you can go Long and Short on a currency pair at the same time, but on a different time frame. Regardless of your strategy, you need to include it in your trading plan. Trading successfully in the long run is about being consistent in execution and having strict money management. Use your trading plan to help you stick to your rules. Without it, you trade based on your emotions.
To your success as a profitable trader,