Items Tagged With aud

Does anyone channel trade the US Session? I've been doing so here and there but have been keeping track of any and all channel breaks during the past 3 weeks in the following currency pairs:

• GBP/USD
• USD/CAD
• AUD/USD
• USD/JPY

I think that I can say that from my limited observations over 3 weeks, these pairs definately move more consistently in the morning US session than others.

Another observation I've made is that the AUD/USD seems to be a great pair to trade.  I never would have thought this was the case but I've found it to be very steady once the price breaks a channel line.  If anyone has traded the GBP, you know the wild swings that occur frequently but it doesn't happen in the AUD/USD.  Once the channel breaks, it takes its time to reach a bit of profit but it eventually does.  Over the last 3 weeks, this pair has 7 wins and 1 loss.  Run-ups have ranged from 30 pips to 90 pips with the average around 30-40 pips.  The drawdowns have been very good with a maximum of -18 pips.  This is assuming that your using a 20-30 pip stop.   This pair actually was good for 30 pips today for me and helped me bring my losses down to around -50 pips.

Let's assume that your risk/reward is 1:1 for simplicity.  If you have a 30 pip stop and a 30 pip limit, here was the performance of these 4 pairs over the last 3 weeks.  I should note that the runups on some of these trades were substantial so if you rode it out for longer, the risk/reward would have been much greater.

GBP/USD - 4 Wins, 3 Losses (+30 p)

USD/JPY -  6 Wins, 3 Losses (+90 p)

AUD/USD - 7 Wins, 1 Loss (+180 p)

USD/CAD - 8 Wins, 4 Losses (+120 p)

I pick and choose my channel break trades and therefore it is discretionary.  I find that I don't pick the right one though but if I was to take every channel trade over the last 3 weeks, I would be up 420 pips and this is with a 1:1 Risk to Reward. 

The latest Commitments of Traders Report was released today.

Crude Oil - ↑ Very Bullish

CAD - ↑ Very Bullish

CHF - ↓ Very Bearish

GBP - ↑ Bullish

JPY - ↓ Very Bearish

USD Index - ↑ Very Bullish

EUR - ↑Very Bullish

NZD - ↑Very Bullish

AUD - ↑Very Bullish 

Before I dive into this post, let me tell you that from everything I've read and watched from Rob Booker (and from everything he has directly told me) it doesn't seem like the Asian session exists to him.  Now he hasn't told me this exactly but he seems to concentrate his effort on the NY Session from 7 am EST - 11 am EST.  I told you earlier today that when he was working full-time, he was trading the European session and he did tell me yesterday that you will get a lot of trade opportunities from 4 am EST.  So from the information I've gathered, I'd have to say he recommends trading during the hours of 2 am and 11 am EST.  

What about the Asian session?  For those of you that work in the United States or Canada or anywhere close to the Eastern Time Zone, the Asian session gives us a chance to actually trade when we get home from work without having to get up in the early morning hours with 1/2 a nights sleep to trade the European session.   

I will ask Rob if he recommends trading the Asian session or if any of his student have success doing so.

What I wanted to do in this post was to mention the most historically volatile pairs during the Asian Session thanks to Kathy Lien from FXCM.  Kathy did a good amount of research on this subject and I thank her for the information though I have asked for absolutely no permission to use it.  These PIP ranges are for the time period between 7 p.m. - 4 a.m. EST

As you can see from the chart above, the best options for risk-tolerant traders during this time period are the GBP/JPY, GBP/CHF, and USD/JPY.

For risk-averse traders, AUD/JPY, GBP/USD, and USD/CHF provide more moderate volatility.

The only problem I see with the risk-tolerant pairs, at least 2 of them is the spread.  The GBP/JPY spread at FXCM is 9 pips, the GBP/CHF 15 pips! The USD/JPY offers the lowest spread on FXCM at 4 pips.

The risk-averse pairs are a bit better spread wise with AUD/JPY at 8 pips, GBP/USD at 5 pips, and the USD/CHF also at 5 pips.