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Trading Call Options in a Down Market

During times when the market is one direction, finding a solid trading location can be difficult. In the case of the EURUSD today, on May 30, 2012, the price had been getting hit all night. US markets were about to open down significantly and the price of the euro had been falling for over a month now. At some point in time prices tend to reverse or retrace back into the move. This is where we looked for our entry today.

The trade set up today was based on two moves that occurred just prior to our entry. The price had fallen a good amount and then fell again. After the price tried to fall one more time the price pushed back up into itself. This is where we got our call option in a down trending market. The price moved up in our favor by 5 pips and never saw any pain. A nice solid winner for the trade of the day at

I had mentioned a secondary trade setup had the price hit 1.2424 or go up into that area. The image below shows where the price reached our area had we entered the trade. It moved against us for several minutes, but then moved down through our entry price over the next 5 min. to close with a five PIP winner. This should have been the trade of the day based on the strategies we follow, but sometimes certain setups in a down trending market can work just as well.

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