Archives for September 2013

The JPY had a very active Asian session and began to pull back hard in the UK session.  After it bounced at the previous day’s Asian session low (Hint) an entry is found.  The stop loss was 14 pips and the idea was to get to the Asian session high for a retest.  As price moves up, we remove any risk from the trade and protect some profits.  This is critical to your trading success and peace of mind as a trader.  When price bounced off our Target 2, we close the trade to lock in our gains.  Price subsequently tests the Asian session high without us.

The AUD set up nicely 15 minutes after the JPY entry, for a nice short to its Asian session low.   Once the JPY started to move up, a theme of USD strength was apparent and the majors moved accordingly with the exception of the CHF which unusually had a very quiet session.

In trading the 15 minute chart, stops of 15 – 25 pips are my norm at current ranges.  Any trade setup requiring a stop loss of less than 15 pips is very desirable.  When trading ranges expand again, a stop loss of 30 pips is possible, but I haven’t had one that large for some time.  When price starts moving in your favour, remember to protect some profit in the event of a sudden reversal.  Never fight the market – you will lose.  Study it!  Go with it – never against it.  If it moves against your analysis, your stop loss is your friend.

Good luck with your trading!

Back tomorrow if we find a trade.

An overall theme of USD weakness was evident throughout today’s trading.  The EUR, GBP and CHF took off without us.  With the NZD having a much larger negative Trade Balance than expected, I was curious to see if I could find a reversal trade and ride it to the Asian session high or higher.

The pair eventually set up – consistent with the USD weakness theme that prevailed.  An entry long is taken – allowing for a 17 pip stop loss and a potential 81 pips to our Target 2.  This is a very attractive reward for the risk.  The first level to get through was the Asian session high and alas we couldn’t do it.  At the close of UK session, we exit for a modest gain.

It’s frustrating seeing some pairs move right to our targets without being able to find an entry, but discipline is key to trading success.  One of my mentors always says, “master your tools, master yourself”.

Good luck with your trading!

Back tomorrow if we can find a trade.

A fairly light news session to begin our trading week.  The JPY moved down after an initial surge higher as the UK traders trapped breakout longs and stopped them out.  After a bearish reversal candle, and lower high, a short entry is taken.  The stop loss is 13 pips for a possible 74 pips to our Target 2.  This a great Reward to Risk ratio and stops of 15 pips or less are very attractive to us.

Price moved down but stopped short of the Asian session low and the trade is closed after the wicky candle reversal.  Price pulled back one more time making a third lower high for the session, then dropped once again without us.

Good luck with your trading!

Back tomorrow if we find a trade.

The AUD continues down retracing the post FOMC reaction.

Once again as the UK session gets underway, there are no buyers above the Asian session high.  Price begins to move down and penetrates the Asian session low.  We wait for a retracement and find an entry with a Reward to Risk of greater than 3:1 to our Target 2.  There is no significant US economic news that we need to be concerned about.  Price makes its way down to our Target 1, where it bounces and we close the trade.

Grain farmers in the US years ago are attributed with discovering what is known as the 3 Drives Pattern.  This is a frequently reoccurring pattern where we see 3 waves, either to the high or low on a chart.  The idea for trading it is to catch the second wave which is often the largest of the 3 drives.  It can be visible on all time frames and is fun to recognize and trade.  It is by no means crystal clear and does not always work, but it can be fun to spot.

Whatever your trading style may be… find your edge, keep it simple, manage risk and be consistent.

Good luck with your trading and enjoy your weekend!

Back on Tuesday if we can find a trade.

After the FOMC announcement, the AUD moved up and today it moved back down.  It’s good to be aware of the fundamentals, but it’s more important to be able to read price, and exercise sound money management.  This involves limiting risk with small stop losses and ideally a Reward to Risk ratio of 2:1 or better – depending on the time of day.

Looking at this particular setup, it was clear that you did not want to be a buyer above the Asian session highs.  There were only sellers above, and after 3 attempts to move higher, price dropped.  With such a large reactive move after the FOMC announcement, I thought the move down would penetrate the pre-FOMC Asian session before stagnating.

It was not long ago that the AUD was worth 1.06 to the USD and even 1.08.  It has a pretty good trading range at the moment, so I will be keeping my eyes on it.

Good luck with your trading!

Back tomorrow if we can find a trade.

The trading in advance of the long awaited September FOMC meeting has had currencies in very tight trading ranges.  The FOMC market buzz is for the tapering of the total monthly purchases of USTs and MBSs to be rduced from $85B down to $75B a month,  and remaining dovish on interest rates.  Traders are also talking about the possibility that the FED may adjust the threshold rate for unemployment lower.

I was not expecting any trades to set up, but the AUD looked attractive.  The idea was to take it short and try to reach the Asian session low.  It was unlikely that the ranges would be anything but muted.  It was a painfully slow boring session and by removing the risk… and more or less waiting to see what would happen, a very small gain is ultimately realized.

The pairs are likely to be active after the FOMC announcement.  Let’s look for some opportunities after London re-opens.

Good luck with your trading!