Wednesday, January 24, 2007

Cutting GBP...about time

Closed my short in GBP at 1.9675 in £6/tick. I'd originally put it on a year ago at ~1.78, which I wrote up in this post:
Basically, I thought that rates in the UK would be moving down (they were then 4.50%, now 5.25%) and that rates in the US would be static or rise. So was thinking the currency would move on the interest-rate differential.
And those interest rates never played out. And now it looks like the UK will be hiking again, so it's time to move on from this trade. Painful...the total loss over a year was £17,555, that's on spot only not on options.
I think I sometimes need to close out trades just to clear my head and re-think the strategy. Feels like GBP wants to make a push for 2.00 just now I reckon, although not sure it's fundamentally justified. Also, as I've mentioned before, but rarely stuck to, I need to use stop losses on some types of trades. Ah well...


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