Forex Tips and Tricks - Keeping It Simple To Be Successful

Blog

Trading the trending AUDUSD down as the USD recovery continues today going into the weekend

by

Headlines continue to be about the spread of the coronavirus. It’s mostly doom and gloom. Governments are making unprecedented moves to contain the virus and stimulate economies from the negative impact. Financial markets this week have sold off heavily.

With no one knowing exactly when this will abate, and with a very strong USD rally again today, a short was taken in the AUDUSD risking 32 pips for a potential 142 pips to our daily target at .6233.

After the U.S. economic releases today, the pair broke to the downside…with its trend. With the markets being as volatile as they currently are, we entered with a smaller position and a larger stop loss. As price moved lower, we locked in profit, taking the risk out of the trade and continued to lock in more profit as it descended toward our target.

When price failed to close our trade just missing our target, we tightened our profit stop further and the next candle closed the trade as price bounced a bit higher.

The current ranges for the majors is increasing which requires larger stop losses at entry than usual. For this reason, it’s best to reduce the position sizing accordingly. The moves are much larger than what they appear…by just looking at the candles.

Good luck with your trading, stay healthy and enjoy your weekend!

The U.K. lowered interest rates by 50 bp and a GBPUSD short trade set up in the U.S. session overlap

by

There was a big sell-off in the GBPUSD when the Bank of England cut interest rates by 50 basis points today. The 50 bp cut is the same as what Australia, the U.S. and Canada did last week.

Once the economic news releases were behind us today in the U.S. session overlap, a short was taken risking 33 pips for a potential 111 pips to our daily target at 1.2821. With a larger than usual stop loss, the idea is not to risk any more proportionately of one’s account than usual. A smaller position is taken and the idea is to remove the risk from the trade when price has moved in our favour.

After the very first candle price had moved sufficiently lower for us to lower our stop loss to a profit stop, should price reverse quickly.

As price continued lower, especially as we approached the end of the U.K. session, we locked in more profit with each candle. We closed the trade at the close of the U.K. session.

The reason we don’t trade in front of Central Bank rate decisions is exemplified today with a 115 pip candle at the time of the announcement. We never know exactly how the market will react to the news and accompanying statement. It’s also why stop losses are always used.

The coronavirus continues to dominate the headlines and the financial markets are awaiting better news, fiscal stimulus and defined relief assistance to offset its negative consequences.

Good luck with your trading!

The USD stages a comeback today and the USDCAD continues higher

by

The USDCAD has moved up over 800 pips this year. Despite the USD’s recent weakness, it’s been able to extend its gains against the CAD.

The USD rebounded today against the majors and a long trade setup was found risking 25 pips for a potential 57 pips to our daily target at 1.3734.

After the pair found its bottom, early in the North American session, a long was taken. Price went sideways initially before moving higher and our trade was closed at our target.

The market is so volatile at the moment, that it is very important to take the risk out of trades quickly and to lock in profits swiftly and regularly. Some of the moves yesterday were sudden and extreme. Trading with half the usual amount of exposure makes sense to me. Don’t be greedy – lock in profit and know that price can reverse and erase your profits if you don’t.

The coronavirus continues to spread and wreak havoc on the financial markets. It was nice to an up-day after the recent carnage.

Good luck with your trading!

Shorting the NZDUSD after it rolls over in the first half of the U.K. session

by

The AUDUSD and NZDUSD tend to trade in the same direction. Both pairs set up for a short today, but I preferred the Kiwi…risking 12 pips for a potential 68 pips to our daily target at .6254.

As price moved lower we moved our stop loss lower and continued to do so as the U.S. open approached. Price continued down to just above its Asian session low where it bounced and closed our trade.

This week has been very volatile as the financial markets continue to unwind as a result of the coronavirus.

Tomorrow is NFP Friday, so be very cautious trading in advance of the release.

Good luck with your trading!

EURUSD trade today following a GBPUSD trade yesterday

by

February’s final week of trading comes to a close with a surprise ending. Just over a week ago the U.S. equity benchmark S&P 500 made an all time high. The coronavirus seemed largely contained in China and last weekend with a major number of new cases reported in South Korea and then Italy, the world equity markets went into a freefall. This created further fear and the equity markets fell all week…and not in small terms.

I have been waiting to short the EURUSD for a couple of weeks – waiting patiently for it to break 1.0775 – it has strengthened instead and moved above 1.1000 today. Fading bounces can be very profitable but choosing entries is the trick and it’s not a good idea to swim against the current. Last Friday we saw disappointing PMI numbers in the U.S. and surprisingly good PMI numbers out of Europe. The USDX has dropped from nearly breaching 100 to 98.41 at time of writing.

Today as the EURUSD continued its climb above 1.1000 but appeared to rollover around 1.1050… a short was taken after a near triple top failed. We entered short risking 16 pips for a potential 54 pips to our daily target at 1.0974. As price moved lower, we immediately took the risk out of the trade moving our stop loss down to ensure a profitable outcome. The idea was to trade the pair down to the 1.1000 figure and tighten up the profit stop allowing for a possible bounce there. As price continued to move down going into the U.S. open, we tightened our profit stop to 1.1000 then lower and our trade was closed at our target.

Yesterday, the GBPUSD set up for short trade as rhetoric heated up between Britain and the E.U. When the pair failed to exceed its Asian session high and moved lower, a short was taken risking 17 pips for a potential 80 pips to our daily target at 1.2851.

Price moved lower and accelerated through its Asian session low and the previous day’s low. We further tightened our profit stop as price continued lower and our trade was subsequently closed on a bounce.

Next week will be an interesting week for the euro and sterling as the two sides further negotiate the Brexit divorce.

Interestingly the flight to safety has decimated the US 10Y yield each day this week with it being off at time of writing by over 8% just today! Gold curiously is being sold off and is currently down over $73 U.S. today. Where the U.S. equity markets close is anyone’s guess but it’s not looking good with just over two hours left.

Next week will be another interesting week and no doubt filled with coronavirus headlines…hopefully positive ones.

Good luck with your trading and enjoy your weekend!

Shorting the USDJPY again today as risk off sentiment continues

by

Monday was an exceptional selling day as the markets reacted to the implications of a pandemic risk for the coronavirus.

On Tuesday the USDJPY moved down but found some buyers near Monday’s low and retraced upward. As the U.S. session got underway, it began to move lower and a short was taken risking 12 pips for a potential 54 pips to our daily target at 109.99.

Price moved lower pushing through Monday’s low then headed to test the 110.00 big figure. With a couple of candles showing long lower wicks (indicating buyers entering) we tightened up our profit stop and targeted 3 pips above the 110.00 figure as our target to close the trade.

We ended the year 2019 with hope that the global economic slow down had abated and Europe was beginning to show signs of inflation. The U.S. – China trade talks had succeeded with a Phase One deal in the making.

In January the coronavirus appeared in China in record numbers, but overall seemed to be somewhat contained within China – with implications of a slowing China economy as a result. Since we live in a global world where people travel, the virus has spread to multiple countries around the world which has very negative implications. As a result the markets are reacting to the fear of what may transpire from here.

Don’t fight the market and trade what you see today as opposed to how you may think this will eventually play out.

Good luck with your trading!