Greenlander and the Euro Meltdown
Did you have a chance to catch the latest pulse of the EUR/USD? If you did, you probably noticed that the pair had pretty much collapsed over the past few weeks as short selling intensified. That’s because, simultaneously, worries over the Eurozone grew while fears over the American recovery began to fade. One trader, who goes by the name Greenlander, flipped this flip to a big profit. This is the story of how Greenlander used the Euro’s collapse to close his trades on the green side.
The Big Euro Hit
So what on earth has happened to the Euro, and more specifically, to the EUR/USD pair? Of course, there are two dimensions to this story, the fundamental one and the technical one. Fundamentally, it’s simply that growth figures released last week painted a gloomy picture for the region, with even the region’s growth engine, Germany, contracting. This means that the European Central Bank, led by Mario Draghi, or Super Mario as he’s often called, will be forced to add stimulus measures to boost exports. And, of course, if the ECB does need to add stimulus, that’s not good for the Euro which will weaken. FX traders didn’t even blink at the notion and simply switched to heavy Euro selling against the Dollar.
Technically, as you can see in the chart below, there was increasing pressure on the EUR/USD, between the 1.345 and 1.34 level, and each time the pair rebounded, more sellers crowded in until the pair eventually collapsed under the selling pressure and hit the 1.3241 low, roughly a 200 pips downslide.
Greenlander Flips Meltdown to Profits
The first and most noticeable smart move that Greenlander undertook was to exercise patience. Greenlander, it seems, has been patient enough to wait for the 1.34 to be broken before jumping on the wagon and shorting the EUR/USD. He opened several shorts on several levels from 1.3371, 1.3314 and 1.3278. But rather than risking a rebound after the prolonged Euro selloff, Greenlander closed his trades quickly with profits on the pair trades ranging from 15 pips to 44 pips which were very lucrative percentage-wise, with some trades returning 35% on his investment. The combination of patience in the beginning and cautiousness in the end helped Greenlander flip this Euro selloff into strong return for his accounts. As seen below, shortly after Greenlander closed his positions the Euro began to rebound, even if later it did eventually slide further.
What Can We Learn from Greenlander?
As can be seen in the chart, Greenlander made a respectable 22.89% return on his portfolio over the past three months which means that, at least for that particular period, he was doing something right. The question is what? Simply put, he wasn’t greedy. Greenlander was patient enough to wait for the 1.34 to be broken before riding on a short EUR/USD and then, when he finally did, he was careful not to stick around for a possible rebound because just when the risk for the rebound was high he quickly closed out his positions. Could Greenlander have had knockout profits if he’d stayed around a little longer? Well, maybe… or maybe not. But in the end, cautiousness ruled out, and good profits was what he settled for, and with a lot less risk and that proves the rule; sometimes the least used but most trusted recipe for success in trading translates to low risk and good profits.
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