Page 149 - Ultimate Guide to Currency Trading

If there is a feeling that the world's economies will slow down, then the price of oil will go
down proportionately. Hence, the reasoning behind your long NOK exposure. The trade would allow
you to capture any anticipated increase in the price of crude oil.

The third and final trade is a market order to buy into the AUD by sell-ing the USD. You know
and have read that the AUD/USD pair has been hurt lately due to the sour feeling in the markets. Your
order is for 100 units long AUD/USD @ 1.02359.

These three trades add up to approximately one-third of your available margin. By leaving
two-thirds of your margin free, you are insuring that your account will be able to withstand any
downturns in the market. Having two-thirds of your margin free allows you to breathe easy, and not
worry about any margin calls until the FX pairs turn in your favor. After reviewing and recording your
trades and observations in your trading journal, you shut down your computer and take the rest of the
night off.

Dismantling a Profitable Trade

After you have set up three trades that are of equal size and total one-third of your available margin,
you spend the rest of the night with your family or friends. The morning follows the usual routine,
with getting the kids off to school and then going to the gym for spin class. Just before you go into
locker room, you stop by to look at the markets as reported by CNBC in the gym's lounge. The market
is up for the morning, not a lot, but enough for your trades to play out.

A few days before, you downloaded an app onto your iPad that lets you navigate your trading
platform with buy and sell commands. The app does not allow you to see all of the technical indicators,
only candlestick charts and a few other charts. No matter, as you only need to check your balance to
see that the net for your trades is up $42.10 for the night. That is approximately an 18 percent return
on your $225.00 balance, a good profit for the day.

Navigating your iPod or smart phone to the "Close Order" page, you close out each of the
three trades and book your profit. The USD/NOK trade closes out @ 5.5881, the EUR/SEK closes out at
9.1627 and the AUD/USD closes at 1.0320. Your new tradable balance is $262.10. Knowing it is best to
walk away after a good day in the markets, you continue on to your classes at the gym.

After the gym, you stop by the coffee shop with your laptop. You enjoy a double-shot espresso
while analyzing your trades. One of the questions you might ask is, what caused the NOK and SEK to
move so much when the obvious choice of long AUD/USD did not have that much of a strong upward
movement? Switching to your broker's statements for the day, you read that China's growth numbers
came in overnight (while you were sleeping) and they showed a slightly slower anticipated growth for
that consumer of raw materials. Since Australia provides much of the raw materials to China, this
implies a slower growth of Australia's raw materials exports.