Michael Bridgman

The GBPUSD surged 450 pips off its low on Thursday breaking through the 1.200 level and still continued up 225 pips. Today after a pullback in the early U.K session it began to move higher again.

After an early double bottom and a further push higher in the U.S. overlap, an entry was taken risking 40 pips. Our daily targets this week have not been that useful on the GBPUSD due to its extreme moves.

As price moved higher to test its Asian session high, we removed the risk from the trade and placed our profit stop to plus one pip. Price broke above its Asian session highs and we continued to lock in profit as it moved higher. After a long upper wick formed with a candle closing near its low, we exited the trade in advance of the session close.

Among the many notable occurrences of the week, the vertical move down of the USD was very interesting as it traded until today, inversely to the U.S. equity markets. Today… going into a weekend the equity markets plunged after 3 days of exceptional gains and the USD continued lower still.

The number of coronavirus confirmed cases continues to climb each day in much of the world. Prince Charles, Boris Johnson and the UK Health Secretary are reported to have tested positive this week. The U.S. surpassed the number of cases in China and emergency measures are being taken by most countries. Now that China has an upper hand on the virus, they are helping other countries with what they have discovered.

These are exceptional times in which we live and trading is fascinating, rewarding and at times quite frustrating as the currencies move erratically back and forth.

Be safe and healthy!

Good luck with your trading!

Currency markets continue to be extremely volatile as governments around the world take extreme measures to deal with the coronavirus and its economic impact. All trading sessions offer trading opportunities and if you’re going to be home anyway…why not look for some high probability trade setups?

Don’t compromise your trading plan, but adjust it accordingly for the current conditions. With the extremely large current ranges and back and forth volatility, it makes sense to me that if I have to double or triple my stop loss, that I will enter with half, a third or less of my usual position size.

There have been many great trades lately and there will always be a few that don’t work out. We are typically looking for a 2:1 or 3:1 reward for the risk that we’re willing to take… or greater. In the current market a trade may run a hundred, two hundred or more pips very quickly. Moving a stop loss to quickly protect profits may result in it being hit and missing out a large number of pips. Not moving it, may cause it to be hit after you were in a positive position. There is no magic answer, but it’s not a good idea to let a profitable trade turn negative.

I had one trade last week that I set with a 20 pip stop loss and it was closed within seconds. The market had a 60 pip reversal and fortunately, I only lost 20 pips. Another trade moved so quickly after I entered, that I was up 55 pips in a blink and locking it in.

Find a balance that gives you comfort while you’re trading so that you enjoy the art. I find it works well to take the risk out of trade once it has moved a certain number of pips in the desired direction. If the worst case scenario is you make money, than your account will grow.

Today early in the U.S. session overlap after the AUDUSD had run up, we entered short right near the .5800 figure risking 43 pips for a potential 262 pips to our daily target at .5540. This may seem like a large stop loss, but by getting the risk out of trade quickly and actively moving the profit stop lower, we remained positive until the trade closed. It didn’t run too far but it still worked out to be a nice trade to start the week.

Good luck with your trading and stay healthy!

Trading is very active at the moment and trading ranges for the majors is expanding. With unidirectional moves, it makes it easier to be right. Trade with the trend. Economic news events scheduled each day are being overshadowed by the coronavirus pandemic and measures governments are taking to both contain it and to support their economies.

Today as the EURUSD began to move downward at the beginning of the U.S. session overlap, a short was taken risking 32 pips for a potential 108 pips to our daily target at 1.0852. The pair had already moved through the critical 1.1000 level.

Price moved quickly downward and we secured profits as it moved lower with continued momentum. Price slowed down at our daily target and the trade was closed.

I was less fortunate with the more volatile EURJPY and was stopped out for 20 pips.

I believe in taking smaller sized positions and keeping stop losses tight, while locking in profits. There are many opportunities to trade in this current market, but it is easier to trade with the trend.

Now is not a time to be either fearful or greedy. Be focused and methodical.

Good luck with your trading!

Headlines continue to be about the spread of the coronavirus. It’s mostly doom and gloom. Governments are making unprecedented moves to contain the virus and stimulate economies from the negative impact. Financial markets this week have sold off heavily.

With no one knowing exactly when this will abate, and with a very strong USD rally again today, a short was taken in the AUDUSD risking 32 pips for a potential 142 pips to our daily target at .6233.

After the U.S. economic releases today, the pair broke to the downside…with its trend. With the markets being as volatile as they currently are, we entered with a smaller position and a larger stop loss. As price moved lower, we locked in profit, taking the risk out of the trade and continued to lock in more profit as it descended toward our target.

When price failed to close our trade just missing our target, we tightened our profit stop further and the next candle closed the trade as price bounced a bit higher.

The current ranges for the majors is increasing which requires larger stop losses at entry than usual. For this reason, it’s best to reduce the position sizing accordingly. The moves are much larger than what they appear…by just looking at the candles.

Good luck with your trading, stay healthy and enjoy your weekend!

There was a big sell-off in the GBPUSD when the Bank of England cut interest rates by 50 basis points today. The 50 bp cut is the same as what Australia, the U.S. and Canada did last week.

Once the economic news releases were behind us today in the U.S. session overlap, a short was taken risking 33 pips for a potential 111 pips to our daily target at 1.2821. With a larger than usual stop loss, the idea is not to risk any more proportionately of one’s account than usual. A smaller position is taken and the idea is to remove the risk from the trade when price has moved in our favour.

After the very first candle price had moved sufficiently lower for us to lower our stop loss to a profit stop, should price reverse quickly.

As price continued lower, especially as we approached the end of the U.K. session, we locked in more profit with each candle. We closed the trade at the close of the U.K. session.

The reason we don’t trade in front of Central Bank rate decisions is exemplified today with a 115 pip candle at the time of the announcement. We never know exactly how the market will react to the news and accompanying statement. It’s also why stop losses are always used.

The coronavirus continues to dominate the headlines and the financial markets are awaiting better news, fiscal stimulus and defined relief assistance to offset its negative consequences.

Good luck with your trading!

The USDCAD has moved up over 800 pips this year. Despite the USD’s recent weakness, it’s been able to extend its gains against the CAD.

The USD rebounded today against the majors and a long trade setup was found risking 25 pips for a potential 57 pips to our daily target at 1.3734.

After the pair found its bottom, early in the North American session, a long was taken. Price went sideways initially before moving higher and our trade was closed at our target.

The market is so volatile at the moment, that it is very important to take the risk out of trades quickly and to lock in profits swiftly and regularly. Some of the moves yesterday were sudden and extreme. Trading with half the usual amount of exposure makes sense to me. Don’t be greedy – lock in profit and know that price can reverse and erase your profits if you don’t.

The coronavirus continues to spread and wreak havoc on the financial markets. It was nice to an up-day after the recent carnage.

Good luck with your trading!