Every trade starts with a reasonWhy one currency should beat the other.
In a good journal, every entry starts with why one currency should beat another, not with a chart pattern. 4 trades from a live journal show the order that held every time: bias, then a trigger, then the entry.
A real journal, entry by entry
This module walks through entries from a live trading journal, kept over 6 weeks in May and June 2025 while the team traded its momentum and reversal strategies in line with its weekly outlook. Earlier lessons showed how to put a strong currency against a weak one and how to write a thesis. These entries show what that looks like with real money on the line.
Every entry opens the same way: with a written reason why one currency should beat the other. The chart pattern comes later, as the way in.
Strong against weak
Take a long GBP/JPY trade. Long means you buy the pair, so you make money if the pound rises against the yen. For the pound, political stability supported confidence, recent data showed the economy holding up, and the Bank of England’s relatively high interest rates attracted global money. Hedge funds were buying too.
For the yen, the Bank of Japan sounded dovish, leaning towards easier money, and with no fresh recession fears there was little demand for a safe haven. That gap between a strong and a weak currency, the divergence, is the core of the trade. The same logic gave a long GBP/NZD, where the pound looked strong and the New Zealand dollar’s bounce on trade-deal hopes looked temporary.
A view needs a catalyst
Sometimes the view is there and the market is not moving. The euro had support in the background: its role as the main alternative to the dollar, a persistent current account surplus and the chance of de-escalation in Ukraine. But momentum had faded, and EUR/USD was stuck in a range.
So the trade waited for a catalyst, an event that changes the picture. It came on 13 May 2025, when US CPI, the main US inflation report, came in lower than expected. Softer inflation made a dovish Fed, one leaning towards lower rates, more likely, and that weighed on the dollar. That was the green light to buy EUR/USD.
The view stayed modest. The bias on the euro itself was only neutral, and the journal says so: the soft CPI gave just enough of a tailwind for a short-term long.
The clue in what does not happen
Sometimes the clue is a reaction that never comes. The pound view was bullish for the same reasons, now helped by a confirmed UK-US trade agreement. On the dollar it was neutral to mildly bearish: US data was solid, but a quick end to the US-China trade dispute looked unlikely. The question was whether the market would keep selling the dollar despite good data.
The answer came with the US PMI, a monthly survey of business activity. It beat expectations, and the dollar barely reacted. When good news can’t lift a currency, sellers are in control. With price still near the planned entry, that was the confirmation to buy GBP/USD.
GBP: stability, resilient data, high rates, a UK-US trade deal, hedge funds buying
USD: solid data, but no quick end to the US-China dispute in sight
The market selling the dollar despite good data
US PMI beat expectations, the dollar barely moved
Near the planned level, by the strategy’s rules
Bias, then trigger, then entry
Put the 4 trades side by side and the order never changes. First the bias: why one currency should beat the other. Then a catalyst or a confirmation, where the market was not ready yet. Only then the entry, by the rules of the strategy.
Writing the reason down first does 2 jobs. It makes you check that a divergence really exists, and it gives you something to review afterwards. If you can’t write down why one currency should beat the other, there is no trade.
| Trade | The reason | The trigger |
|---|---|---|
| Long GBP/JPY | Strong pound, dovish Bank of Japan | An improving risk mood |
| Long GBP/NZD | Strong pound, a kiwi bounce built on hope | No separate trigger noted |
| Long EUR/USD | Solid support for the euro, but a range | Catalyst: soft US CPI |
| Long GBP/USD | Strong pound, doubts about the dollar | Confirmation: strong PMI, flat dollar |
Mistakes to avoid
- Treating a view as a green light. A sound bias on a pair stuck in a range can go nowhere for weeks.
- Reading only the number. Good news that fails to move a currency is information, and you miss it if you only check the forecast.
In short
- Every journal entry starts with why one currency should beat the other, such as a strong pound against a yen with a dovish central bank.
- A view alone is not a green light: the EUR/USD trade waited for a soft US CPI, and the GBP/USD trade for a strong PMI that left the dollar flat.
- Bias first, then the trigger, then the entry by your strategy’s rules. If you can’t write down the reason, there is no trade.
Key terms
- Long and short
- Long means you buy and profit if price rises. Short means you sell and profit if price falls.
- Divergence (macro)
- When two economies move in different directions, for example one central bank raising rates while another cuts. Currencies often trend on divergence.
- Hawkish and dovish
- Hawkish: a central bank leans towards higher rates to fight inflation. Dovish: it leans towards lower rates to support growth.
- Safe haven
- An asset investors buy when they are scared, such as the Japanese yen, the Swiss franc, gold or US government bonds.
- Catalyst
- An event that can set a move in motion, such as a data release, a central bank decision or a speech.
- Bias
- Your expected direction for a market over a time frame: bullish, bearish or neutral. A bias is a starting point, not an entry signal.