The other day I jokingly told a friend if I didn’t take a loss this month nobody would believe my trading record for August. Coming into this week I had managed 100% accuracy for the month but fortunately my credibility has been restored when I took a loss on Wednesday, heavy sarcasm here.

In poker there is card known as the “kicker” which is simply the highest card in an otherwise weak hand. Players may bet into a hand when they have a high “kicker” and suspect their opponents are evenly matched. You may have heard someone say “He has a pair of sevens with an ace kicker” which describes their mediocre hand but at least the player has an ace.

When trading technical setups every other trader in the world is looking at the same chart you are so you need an advantage in order to make the difference between trading with strength and trading with mediocrity. I try to mix solid technical setups with fundamental strengths as my kicker card. The problem with using fundamental data as a kicker is you don’t know exactly when the kicker will be dealt. When the fundamental calendar has two major releases the market often waits for all the data to be released before making a big move, patience is a virtue.

First, the Dumb Trade

Yesterdays EUR/USD short was fundamentally flawed for two reasons:

1. I’ve never had luck trading trend line breaks inside channels. You’d think I would have learned my lesson by now, click here to see what I mean. I should have waited for the market to trade near the channel extremes which is a much better technical setup. In the middle of a channel is a no-man’s-land where anything could happen.
2. The durable goods data was great but the market was waiting for GDP data before the bigger move. I should have realized the fundamental kicker would come today and remained patient.

Second, the Genius Trades

Of course I don’t proclaim myself to be a market genius but contrasting the execution of this morning’s trades with yesterdays, it was pure genius.

GDP data came in very strong completing the fundamental kicker so I looked for an opportunity to get long Dollar. There were two pairs trading near the edge of channel patterns which were EUR/USD and USD/CHF.

The Euro looked particularly weak to me thanks to bad IFO numbers and bad data out of Germany all week long. Remember we are always looking to buy the strongest and sell the weakest.

I waited for candle stick patterns along the channel boundaries shown in the chart below before entering short EUR/USD and long USD/CHF. I realize these are correlated pairs and while effectively I may have been “doubling up on dollar” I liked the basket approach because Euro looked particularly weak, Swiss Franc tends to move on risk appetites and I believed in dollar strength. Additionally, there is nothing wrong with taking multiple positions as long as you’re not violating your account’s overall risk ratio.

“New York Hammer” trades are intra-day trades only, I do not hold them over night. I took 83 points on the EUR/USD and 81 points on the USD/CHF.

Although I wasn’t able to post these trades in real-time, I wanted to share the thought process I went through so you can learn from my one mistake and one success this week.

I hope you made some money today, it was a great market.

Ryan