Everyone seems to agree at this point that a shift in interest rate expectation in favor of the USD has caused its current bullish trend. Yet, I used to have the tendency to go both ways. In other words, I used to trade more aggressively. Here’s the difference, although it may promise more return, it’s very risky to trade against the trend.

As I watched price actions when London session started earlier today, the EUR/USD pair slowly edged up for quite a long distance, from the low of 1.4910 all the way to 1.5080. Normally I would long the pair because it may seem reasonable at that time. Why? First of all, the Russian-Georgia war would threaten oil supply from that area and hurt the dollar. Secondly, ECB’s Liebscher suddenly issued a very hawkish speech on the EUR. So it seems to be a good opportunity to buy the EUR against the USD.

But then I paused for a moment and thought, “how far will it edge up? and what if it falls too quickly and never recover?” So I stuck with my conservative strategy, wait until it seems to be at peak then short the pair according to current trend. So I shorted the pair at 1.5072. I set limit at 200 pips away and went to bed. This morning I decided to exit at 150 pips profit! Such a nice and easy trade. As it turned out, Liebscher’s comment was a very, very good opportunity to enter a trade against the EUR. I guess many other traders share with me the strategy and profit.