It's a Game of Inches

Baseball is called the game of inches. A hard hit liner can scream into the outstretched glove of an infielder for an out. A softly struck shot can skim that same glove, landing in the outfield for a hit. Today I was stopped out twice; both times by a mere pip or two.


The 3am Grid Prediction

Yesterday's 3am GBP candle was 68 pips. The 3am Grid predicted that whatever direction the GBPUSD would take, ultimately it would REVERSE with a 75% probability.





Around 5am the GBP breached the BUY at 1.4176. I was a little slow jumping on it, but I finally got in a SELL at a little after 6am. By 6:30am I was stopped out, as the GBP surged to 1.4229, a whopping 4 pips past my STOP. Bummer.





Anatomy of a Mistake





I have a secondary account with FXSolutions. I like to use this account when I have things to do during the day, because this package allows you monitor and control your trade from your cell phone. I don't have a lot of money in this account. For a while I was using it to do mini-lot trades to test different strategies.









Seventy-five percent is a high probability. Once it seemed that the GBP was going to stay north of 1.4200 it seemed prudent to put a STOP-ENTRY SELL at 1.4176 to catch it should it reverse.




At 7:37am it did just that, breaching the BUY by 20 pips. An hour later though it started to push into the 1.4200 area. And that's when it happened. At 8:12am I margined out when the GBP reversed by 42 pips. My STOP was set at 50 pips, but as it turned out, my margin would only support 40 pips in the red. But an out is an out, a STOP is a STOP. I was out.



Once More Into the Breach
As I watched the GBPUSD approach a secondary peak for the day, the RSI's and MACD's on the 60/15/240 were all registering OVERBOUGHT. Experience told me that this was still likely to turn. I put in the SELL at 1.4176. Less than an hour later the GBPUSD hit the predicted LIMIT of 1.4083 for gain of 93 pips.



Bottom Line
Probabilities, small margins of error and experience combined to give me a breakeven day. I lost 50 pips on the original trade that retraced 54 pips. I lost an additional 40 pips on the margin call when the currency retraced 42 pips. Ultimately, I took a trade and gained 93 pips. A lot of work for 3 pips. But I'll take a breakeven day over a loss every day of the week. Oh, and more thing. The 3am Grid predicted the reversal and it was correct again.