Less than 2 weeks ago, we closed out our 2 USDNOK short trades for a good profit after being bullish the Norwegian krone against the dollar for an extended period of time. In the following week, we initiated a long position on the same pair, expecting a bounce from our entry price.
On 2 May 2016 (last Monday), we went long USDNOK at a price of 8.0350. Less than 42 hours later, the long trade was closed out for a profit of 1,120 pips, or +1.39%. In this piece, we talk about this trade, why we flipped from being bearish to bullish USDNOK, and how we managed to do it on such short notice.
The most important takeaway for traders and investors is the concept of not falling in love with any position or bias. The markets make it too easy for us to fall into this trap, especially when old trades or positions have been highly profitable and are deep in the money; it's psychologically hard to exit large winners and flip the other way.