Archives for January 2013

The EUR continues to move higher this week and is up substantially after two down days at the beginning of 2013.  After testing the Asian session lows, it began a slow ascent to test the Asian session and yesterday’s highs.  With little significant news out of Europe or the UK and Non-Farm Employment Change numbers due out tomorrow, the EUR topped out near yesterday’s high for modest gains.

January was a month where levels from last year were tested and re-tested.  Let’s see what February brings.

Be very careful if you trade near the Non-Farm Employment Change release tomorrow.  We do not trade on that day of the month.

Back Tuesday.

Good luck with your trading!

A number of the major pairs reached our Target 2 overnight.  I didn’t like the setups, so I didn’t trade them.   When a currency pair breaks out above the Asian session high or low and runs, it is best to let it go.  “It’s never a good idea to chase a trade.” – my mentor always said.  He trades in the tens of billions of dollars, so I maintain his words of wisdom in the forefront of my brain, before I take trades.  This rang through loud and clear for the UK session.  “The market will always be there tomorrow…” he would add.

Good luck with your trading.  Stay disciplined and patient.

With no significant news releases out of Europe or the UK, we await a familiar setup.  The EUR begins the UK session rising but falls short of the Asian session high, puts in a double top, followed by a bearish candle to the downside.  We enter short with a stop above the Asian session high.  This setup just meets our minimum Reward to Risk of 3:1 to our Target 2.  Price begins downward and just over an hour into our trade, price reverses, creating a triple top, before being pushed down hard.  We make it through Target 1 but fall short of Target 2.  As price begins to rise toward Target 1, we close the trade for modest gains.

As we do not trade on Non-Farm Payroll Fridays, we hope to catch some bigger moves in the next couple of days.

Good luck with your trading!

Questions – Michael@privateforexcoaching.com

The EUR made an extended move during the Asian session.  My preference would have been to trade it short if the setup presented itself.  Instead the EUR broke above the Asian session high, then re-tested that level.  Due to the fact that we were so close to the Targets 1 and 2, the minimum Reward to Risk of 3:1 to our Target 2 wasn’t there.  This is why I had wanted to see a short trade setup that I could take which would meet the 3:1 minimum.

The pair continued higher making a series of higher lows surpassing our Target 2 level and going up to the Red line indicated on the chart.  Statistically, price is likely to reach our Target 1 and Target 2 in terms of probability.  This however does not mean that it will each day – only that it has a very high probability of reaching our levels and so that is why we determine our Reward to Risk based upon Target 2.  We always protect profits once Target 1 is surpassed.  Statistically, once Target 2 is surpassed, price is much more likely to begin to retrace than to continue its move.  In other words, we don’t get greedy past Targets 1 and 2.  On a few occasions during the year, price will go well beyond our Target 2 and possibly double its range, but those days are few and far between and result from an over-reaction to some news event.

The Red line on the chart  today is from the Daily chart.  It is a tool we use to determine where price is likely to go – over time.  It too is a target and when price reaches it, price is statistically likely to pause and re-test it, before either moving upward or downward from it.  This tool is used by some very massive institutional longer term traders.  We are intraday traders but we pay close attention to the levels where massive traders may slam on the breaks for a given day.

It’s been a profitable week, but we were unable to find high probability trade setups each day.  We don’t compromise our trading style, we are highly selective each day and with each trade.  I recommend all traders  be the same way.

Enjoy your weekend!

Back Tuesday.

The GBP set up for a nice short overnight giving us a Reward to Risk ratio of 4:1 to our Target 2.  It slowly drifted down toward the Asian session low.  It then dropped significantly in advance of the US Employment numbers, after the US traders entered the market.  When this happens, protect your profits before the candle even closes, by adjusting your “take profit” in advance of the news release.

The reaction to the news could easily reverse the market along with your profits and stop you out in a blink.  Choose an acceptable number of pips for your “take profit” level and lock them in.  The news created very little pullback at first and the GBP passed through our Target 1 level – where we closed the trade when it began to pull back.

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Good luck with your trades and remember the World Economic Forum meetings continue in beautiful Davos Switzerland.  Be very careful with your stop loss placement.

Back  tomorrow,

Questions – Michael@privateforexcoaching.com

The EUR has been consolidating since January 11th, but it is still putting in a nice range most days.  There was no major economic news releases for either the EUR or the USD today.  The annual World Economic Forum in Davos Switizerland began today.  Keep stops tight.  The potential for whipsaw movements is there as this conference hosts representatives from over 90 countries.

It took a while to set up but with the EUR showing no signs of upside momentum, we found a short trade.  Eventually it worked out to our advantage.  With a Reward to Risk ratio of 4:1 to our Target 2, patience from yesterday paid off.

We don’t give back our profits once Target 1 is hit and yesterday’s low proved to be an area where buyers entered the market.

Good luck with your trading and protect your profits as we may encounter a lot of volatility during the WEF conference this week.

Back tomorrow.

Questions???  Michael@privateforexcoaching.com