Anybody followed the NFP report, or rather markets reaction to it? It was a good example of trading on emotions, the sudden change of direction in most pairs. Economists are once again talking about turning tide and claim improvement. This is based on a slowing pace of layoffs, with employers reporting cutting 345,000 jobs, which is less than expected. It doesn’t change the fact that unemployment rate jumped to 9.4 percent in May, the highest in more than 25 years. By some sources, if laid-off workers who have given up looking for new jobs or have settled for part-time work are included, the unemployment rate would have been 16.4 percent in May. Since the recession began in December 2007, the economy has lost a net total of 6 million jobs. With this in mind I salute optimism of anybody who celebrates “turning tide”.
I think this double interpretation of same figures hightened  up emotions in traders. Dollar had a beautifull fake in all its crosses, taking out many stops and and maybe even creating some slips, with a lot people changing minds and chasing market. Even though, dollar traders got off easy. Yen pairs didn’t just have a fake, they had a whip both ways, which was probably expensive to a lot of people. Trading news releases at it finest. No, not finest yet. It will get much more interesting going deeper into the summer. From now on I expect NFP news to be getting progressively more volatile, for next 2-3 months. This might continue until public starts accepting whatever comes out as universally good or bad. Not both ways.
In my abbreviated post yesterday I mentioned closing GBP-JPY trade that had been so prominently featured on these pages.  Half of this trade had been closed earlier in the week for a good gain, with the balance intended to be held much longer. Two nights ago price of the beast broke sharply. Some pullback was expected, after reaching 160 level, but the speed of the fall caught me by surprise. My own emotions kicked in and I closed the rest of my position for about 490 pips profit.

At this point I’m not even sure why I jumped a gun here. I mean this trade had been planned as a long term from the start, this kind of set back should be normal. Profit was already locked in, position size was small. This should have been a routine, garden variety retracement, with me maybe adding at 155-156, not closing. In retrospect, perhaps this one trade was given too much attention and weight in my mind, so I reacted on emotions. It is not a matter of making a wrong decision, that I do every day, but an impulsive, emotional reaction. Maybe too many things going on at once? I guess we learn something new about ourselves everyday .
At any rate, I reentered long at 155.68. In all frankness, I have not decided whether to hold it for a bigger objective of 163, and maybe even 165, or to trade in smaller steps, of 150-200 pips, depending on how the charts develop. For right now I have a mental stop at 153, but other details will be decided over the weekend, once my emotions are put in the closet. Far in a dark corner.

Mike K.