Archives for June 2013

UK traders move the EUR up and the US traders move the EUR down!  A fairly light economic news session ends the first half of the trading year.

The EUR reversed off its session high with a big wicky candle.  After the close of the next candle a short trade sets up.  An initial stop loss half way up the wick, creates a better than 3:1 Reward to Risk to our Target 2.  Price penetrates through the Asian session high, before testing yesterday’s high leaving another wicky candle.  By adjusting our stop loss to plus 1 pip, we remove the risk from the trade.  Price then drops to the Asian session low and pauses.  We move the profit stop to just above the early session lows.  Price continues to drop further through our Target 1 – almost making it to Target 2.  Once it does penetrate our second target, the profit stop is adjusted and the trade is closed as price retraces upward.  Price subsequently bottoms for the session near yesterday’s low – to end the first half of trading year.

Looking forward to the second half of 2013.

Enjoy the weekend!

Back Tuesday if we find a trade.

For the second day in a row the AUD sells off in the US session at the same time, which today corresponded with the second round of US economic news.  As the Pending Home Sales number is released the AUD began to rise and is quickly reversed by sellers – in a zone which had been evident all session.

A short trade is taken as price retreats below the previous candle’s low.  Two tools that we use made this trade setup very attractive.  As price comes down, risk is removed from the trade and profits are protected by moving the stop down as shown.  Price is unable to close below the Asian session low, and we are subsequently closed just above it – when price hits our profit stop.

Let’s see what Friday brings to conclude the month.

Good luck with your trading!

Back tomorrow if we find a trade.

The CHF had the makings of a good trade, but the momentum faded quickly. Well into the US session, a long setup is found with a better than 3:1 Reward to Risk to our Target 2.  We enter the trade with ninety minutes left in the UK trading session. The trade moves up and after the European traders finished their day, the momentum appeared to leave the market.  We are closed when price hits our “profit stop” for 20 pips.

Good luck with your trading!

Back tomorrow if we find a trade.

NZD set up for a short trade after the UK economic news releases, and in advance of  ECB President Draghi speaking.  After the UK news, the EUR, AUD & NZD turned down and the CHF turned up.  After a vertical move up when the UK traders began their day, the NZD came down vertically making for a quick trade.  Although it would have been nice to have reached the Asian session lows before President Draghi spoke…it wasn’t to be and we don’t like to give back our profits… so we exit the trade after the wicky candle as price begins to retrace.

Good luck with your trading!

Back tomorrow if we find a trade.

The AUD produced one of my favourite setups.  When the AUD couldn’t take out the Asian session high after an active Asian session, we enter and attempt to get to the low of the Asian session.  As price moves lower we take the risk out of the trade and begin to lock in profits.

Ideally we want the AUD to drop to our Target 2 level, but it must make it through the Asian session low, yesterday’s low, and Target 1 before that can happen.  Price is likely to test and retest the Asian session low and yesterday’s low before dropping further.  As it approaches the Asian session low, buyers enter.

I am very opposed to giving back too many pips of profits, so instead of waiting for price to go a few more pips to the Asian low, as it begins to pull back, I lock in 35 pips…which is still a nice move to capture to end the week.

It’s been an interesting week with the market digesting Mr. Bernanke’s FOMC remarks.

Enjoy your weekend!

Back Tuesday if we find a trade.

The FOMC statement yesterday created lots of anticipated volatility.  This was followed by more subdued markets today – despite lots of economic news releases.

The CHF set up nicely for us, but it had a lot of difficulty penetrating yesterday’s high and the Asian session high.  Once it did… buyers entered the market pushing it back up as evidenced by the candles with the long lower wicks.  If price can’t go down, and long wicks form, be very careful… as price is likely to reverse.  Coupled with more economic news releases and pending stock market openings and  it’s best to protect any profits or get out of the short trade.

I was taught years ago…that if price doesn’t do what its suppose to do – GET OUT of the trade!

I like to enter trades with either a minimum Reward to Risk ratio of either 3:1 to our Target 2 during the UK session, or  2:1 R/R once the US session has commenced.  I also like to remove risk from a trade as quickly as possible.    By moving one’s initial stop loss to plus 1 pip, risk has been removed from the trade and the worst that can happen – is the market takes you out for plus 1 pip.

As price had difficulty closing below yesterday’s high, the stop loss is moved to plus 1 pip, once the wicky candle appeared.  With more US news approaching, the profit stop is moved to plus 5 pips.  As price seems to have difficulty moving lower and giving back pips is never fun, the trade is closed as it retraces above the previous wicky candle low to lock in 25 pips.

Good luck with your trading!

Back tomorrow if we can find a trade.