Trading the News

Trading the news is something I've been trying to learn since I started Rob Booker "1 on 1" training.  I'm finding that the potential to be profitable doing so is there.  It does take time to learn though and the only way is to gain the actual experience of trading during volatile macroeconomic news reports.  

Today, I traded the news and made 30 pips on 1 trade and lost 30 pips on another.  Unfortunately during these times more than others, the price can swing wildly back and forth so the chances of your stop getting taken out quickly is a strong possibility.  The key is obviously in the entry.  You don't want to jump the gun and enter too quickly but you also don't want to enter too slow.  I entered both positions today at the same time after the close of a 15 minute candle.  These were both valid entries and both swung against me by more than 20 pips.  The Yen swung too far against me and I was stopped out as mentioned previously.  The Sterling swung about 25 pips against me (I had a 30 pip stop) initially and tried for an hour to move back in my direction.  There was a point when my position was even and I could have gotten out of the trade unscathed.  I decided to stay in because I've made the mistake of exiting right before the trade goes my way.  The pair went 20 pips in my favor and I thought again that I should exit.  I waited and waited.  My limit was 30 pips.  The pair was up 28 pips and I still waited.  My target was hit and even though I'm even for the morning, it felt good to have shown a bit of restraint and confidence in my initial entry.  

With that said, I wanted to mention a new article by Boris Sclhossberg that talks about exactly what I'm trying to learn; trading the macroeconomic news.  It's a quick read and worth it if your interested in learning how to trade the news.

http://www.investopedia.com/printable.asp?a=/articles/forex/06/ScalpFundamentally.asp

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Frustration Bottling Up

I'll admit that the frustration of losing is bottling up.  I did manage to end the losing streak by getting a couple of smaller pip wins today after my 30 pips loss.  I ended the day -15 pips.  I sent a message to Rob this afternoon stating my frustration and he had 2 suggestions for me:

1. Stop trading the EURO!  He thinks the currency pair is a "turd" and that it hardly moves.  He told me to stick to the GBP which has been moving big time over the last 2 weeks.
2. Decrease my lot size on a day with no economic news whatsoever.  I only traded 1 lot, followed my rules, and only lost 30 pips so it ain't so bad

I sent a follow-up question asking him what pairs he likes to trade most. 

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DashboardFX: Forex Weekly Wrap-up

EUR/USD

A virile run mid-morning at the session close, as market participants drove the dollar down to near session lows of 1.1945.  When all was said and done a tight range of 1.1845/1.1955 was fashioned in the major European counterpart and the benchmark currency.

What is interesting to note regarding this week’s price action relative to the previous is that we have two ranges with one large move lower separating them.  That coupled with the cresting off the benchmark S (former R) in the 1.1860 area, which has stymied those bidding the dollar on many occasions in the life of the pair, implies perhaps a solid base pattern of an inverted H&S is in the process of developing with the head all but confirmed on today’s rally in the pair.  The moment of truth for the pattern comes in on the break back into last week’s range followed by a failure to trade through it – thus drafting the second shoulder.  We have cited the major R above as the top end of the shoulder range.

GBP/USD 

Sterling dealers and traders alike have noted vehemently the significance of the MPC minutes slated for next Wednesday.  A prominent reporter in the UK feels an admonishment of a 5-4 split in the minutes could strongly imply a 25bp hike is in the shoe.

As we noted yesterday, “…with such a wide swath these orders clearly have rather lofty targets or expect to average in with size on forays below 1.7340/50.  Irrespective, the activity has garnered attention…” regarding some purported dealer’s activity and it turns out that our summation was incredibly predicative given the proceeding 24-hours of pricing.

USD/CHF 

With no front page news regarding geopolitical unrest, it seems unlikely that the pair will style any type of meaning retracement of the overt trend.  However, we know better to presume the two cannot take place simultaneously, perhaps exacerbating a strengthening in the Swiss franc and weakness in the dollar. 

Some clear top patterns have emerged; but the pair continues to make new highs and the patterns are somewhat eschew.  As we noted recently, “…The drop from the major R we noted in yesterday’s report was rather precipitous and could be ominous indication of more selling pressure to come.  Yesterday daily low of 1.3040/45 will be the moment of truth for those attempting to break the overt trend…” and it seems this statement is rather accurate given the resulting price action.

USD/JPY

The pair continues to rally following our call on the significance of the 1700 figure.  Session highs were recorded at 118.87 following Thursday’s rollover.  It has come in a bit however, leaving a tall wick behind in the vicinity of macro R.  this could be a tell tale sign of some virile selling as specs unwind what have now become very large positions.

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