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

Popularity: 6%

Asian Session May 8th

Journal Entry

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I decided to trade the Asian session and shorted the USD/JPY.  I was just stopped out at 0 profit/loss. 

I shorted the pair on a break of the support trendline and a break of RSI trendline.  It was good entry execution.  I waited for the price to break the trendline and then waited for the 15 minute candle to close.  After I was up 20 pips, I moved my stop to break even at 111.52.  My limit was still 111.05, right above a lower support line.  The trade was up as much as 28 pips where I typically would have closed the position.  Tonight, I wanted to show a little restraint and patience so I waited.  The pair never made it back down before stopping me out for a scratch.  

Should I have taken the 28 pip profit? Would you have?  

Popularity: 3%

May 2nd NY Session #2

Funny how I was able to squeeze out a 11 pip profit on a trade that was absolutely discretionary.  I was watching the GBP/USD and it was highly overvalued on the short-term charts with solid resistance at 1.8400.  Even though the pair had reached a new high today, the MACD histogram failed to reach new highs (negative divergence on the 5 minute, not shown below).  The I shorted the pair at 1.8380 with a stop 30 pips above at 1.8410.  Once the pair ran up 15 pips, I set my stop to breakeven.  It ran up as high as 26 pips but started losing momentum.  I was watching for an exit on the 5 minute charts and once I noticed momentum and inertia decreasing, I exited.

15 minute chart below: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Popularity: 4%

First Trade 1 PIP Profit!

OK.  I closed out the GBP/USD position with a 1 pip profit for 2 reasons:

1. European session is over
2. All major currency pairs are consolidating in expectation of US economic reports this morning.

I couldn't set the limit to close out the pair at break-even so I performed it manually.  That is why I profited 1 pip.

Good thing I did.  The pair moved upwards 20 pips right after I closed it.   

I'll regroup and see if any setups emerge during the next couple of hours.

Popularity: 4%

Booker Analysis for Upcoming Week

Rob Booker for AUD/USD (4-hour chart):

I am considering two trades on this pair:

1. On a break below the redline, I think we can get all the way to the 38% retracement at .7219.  A break of that level should take us as far as .7180.
2. I would really like to see a resumption of the uptrend that we were in before – and this would happen above .7350.  On a break above that level, even to .7365, I like a long trade, stop .7300, target at least .7500.  More on that if the trade opens.

 

 

 

 

 

Popularity: 2%

My first trade in weeks

Just like that I'm back in the game.  I made my first trade in weeks going short on the USD/JPY.  Why did I decide to go short? Quite simply because of the strong resistance directly above my entry.  Early in the Asian session today, we saw the pair push as high as 118.69 but it couldn't hold. I'm looking for the pair to come back down to the 116.75-118.00 range perhaps retracing to the .618 fibonacci from the 4/3/06 high of 118.80. 

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Popularity: 2%

Are you a Fisherman or a Snow Boarder?

There's a new forex article on Investopedia about trading your own trading style. 

Are you as patient as a fisherman or do you thrive the downhill thrills of finishing a snow boarding run?  Fisherman are trend traders and Snow Boarders are faders.  The point of this nonsense is that you have to trade to your style.  If you hate fishing, why trade like a fisherman.  The conclusion is:

Whether you are a long-term fundamentalist or a short-term technician, the FX market can accommodate your style. Although the argument between the two camps will probably never be resolved, the one undeniable truth of trading is that you must use the style that best suits your personality. Otherwise, you are unlikely to succeed, regardless of the soundness of your approach. Therefore, the first question an FX trader should ask him or herself is not " Is this pair going to go up or down?", but "What kind of a trader am I?"

Trade to your Taste

Popularity: 1%

Dooku Forex Trading System

I started to work on multiple trading systems over the last week or so and realized that I was falling into the same trap of trying to do too many things at once.  I decided this weekend to work on my first trading system more.  The first thing I did was give it a cheesy name so that I can distinguish it from all the others.  I have named it Dooku.  You can figure out on your own where I got this one from. 

This system was previously being tested on hourly charts with a risk reward of 1:1.  It tested well with a 50 pip stop loss and a 50 pip profit target.  The first thing I wanted to do was to get the risk reward to 3:1.  I successfully accomplished this and Dooku tests very well on the hourly charts with a stop loss of 75 pips and a profit target of 225 pips.  

I will forward test this system this week and going forward to see how it performs.  From my backtesting, it has never had a losing month.  I will forward test this with real money and 1 lot each trade.  I will use a 75 pip stop and a 225 pip profit target.  I will trade only the GBP and EUR.  From my calculations, this system will generate an average of 20 signals a month for each currency pair.

Popularity: 3%

Wave Analysis for Multiple Currency Pairs

The fibo-group submitted their wave analysis to my forex directory yesterday and it’s pretty interesting stuff.  Here’s an example of the commentary and respective chart for the Daily USD/CAD:

The pair reversed sharply, having broken the second critical level. No “Signal line” of the descending “Andrew’s pitchfork” degree Minor is broken. That’s why it is too early to talk about reversal. We see retracement. The depth of the retracement is seen as the “Reaction line 23,6%” of the “Andrew’s pitchfork” degree Intermediate, drawn from the last wave pivots of this wave degree. The pair forms pivot on this “Reaction line” in 80% of all cases.
This suppose is confirmed by the fact that this resistance level is marked by the “Upper signal line” of the descending “Andrew’s pitchfork” degree Minor.

 

 

 

 

 

 

 

 

 

You can check it all out at http://www.fibo-group.com/pages/505

Popularity: 3%

Learn from Booker

More Booker Today:

The pair closed above the channel top.  I am very bullish on this pair right now.  The channel is about 500 pips wide, and that means that I am looking for a move above the channel of 500 pips, give or take 50.  The pair broke above the channel at 205.20-30 or so, and that means we are targeting 210.00 for the profit target.

 

 

 

 

I took the first part of this trade with a small lot size (a fraction of my regular trade size) so that I could safely place my stop back inside the channel at 203.60.  This means that I have plenty of room for the pair to bounce around.

This trade is not risk free!  Even though it seems to be on a trip upward, we could see a sudden reversal in this pair.  Do not ever risk a substantial portion of your account on 1 trade or set of trades.  Make sure you limit your risk on wide stopped trades by reducing your trade size.

Popularity: 2%

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