This week we are going to be hosting a FREE Forex Trading room, we’ll talk about:
Cheers,
Raul Lopez
http://www.straightforex.com/
There are a few things I don’t like about the Forex market, or not that I don’t like, but I feel rather uncomfortable: like trading during important fundamental announcements…
But take a look at the market today, just after the FOMC Statement… Most majors, including the GBPUSD, EURUSD, USDCHF and the USDJPY broke through the medium term range they traded for more than a week, opening a whole new range of trading opportunities. That’s not bad is it?
So, right now what I see in the majors is:
EURUSD – Bearish bias
GBPUSD – Bearish bias
USDCHF – Bullish bias
USDJPY – Bullish bias
And that I like… trade opportunities, even if they come as a result of a fundamental announcements.
Cheers,
Raul Lopez
http://www.straightforex.com/
Earlier this morning someone asked me, if I only traded one currency pair, which one would I choose? My first thought was “its got to be one of the Yen crosses”, but you know, this wasn’t the case for December or November last year…
In this moment, I think the yen crosses are the ones that are offering the best trading opportunities, specially the AUDJPY, NZDJPY, CADJPY and CHFJPY (all of them trading in a bullish market condition). But I also remember last year the GBPCHF and the EURGBP were trading in between consistent support and resistance levels, so I was focusing on them back then… And earlier 2009, I was focusing in the EURJPY and GBPJPY… and earlier the commodity pairs.
So I guess, the best Forex pair to trade changes, just as the market condition does. It would be good to know though in which pairs to focus, which pairs are trading in between consistent S&R levels, etc so we can get better results.
So I guess my answer to the earlier question… it depends. Right now I would choose the AUDJPY or the NZDJPY.
Cheers,
Raul Lopez
http://www.straightforex.com/
Yesterday I was talking to an old trading pal about the impact of the Aussie unemployment report (real good numbers by the way, jobs gained were +35.2K and the market expected 10.2K and the unemployment rate was 5.5% against 5.8%). Anyway, he traded that report, just a few seconds before the announcement he went long and held the position for a few hours making a quick pip there.
Of course it is always good to get pips here and there, but what I always keep in my mind is the alternative history (in the economic arena this is similar to the opportunity cost). In this case, what if the market went down instead? (You know sometimes the market moves against the fundamentals), even if you use SL orders, the market could gap then your loss will be unbearable to take, you would wait and see if the market recovered but it continues to move against you. The worst scenario here would be to blow up your trading account just for a quick pip: this is the results of your alternative history, are you willing to take this type of risks?
Lets put it this way, if you keep trading the unemployment announcement say for 2 or 3 years, the “unexpected event” (of the market moving against you after that announcement) will arise sometime during that period and the result will be devastating. I ask you again, are you do you have a shield for the “unexpected event”?
Please feel free to comment.
Trade Safe!
Raul Lopez
I like the first Friday of every month, not because how the market reacts to the Non-Farm Payrolls announcement, but because I take the day off (Actually, I did write this post yesterday and scheduled for today).
It’s very difficult to trade the most important announcements, the market goes crazy making wild swings, and most of the time the market ends up where it all started. I think this is the kind of risks that traders should avoid, we just can’t afford it. Picture this scenario, you been trading all month long, following your strategy but somehow you decide to trade the NFP announcement, and all you’ve made during the previous month vanishes. I just don’t like the idea.
Even if we knew the actual figure, it would still be difficult, because sometimes the market moves against the fundamentals, good data, and the market goes down, bad data and the market goes up, very bad figure and the market stalls, etc.
This is why I take the first Friday of each month off. What do you think? Is it worth it?
See you next Monday! Have a nice Weekend.
Raul Lopez
Just wanted to let you know that you will be able to save on our courses on December:
10% off in the SF Intensive and 5% off in the SF Advanced
You will be given access to the whole course material during December and the live trading sessions will start the 4th and 11th of January.
For more information please email me at raul@straightforex.com
Trade Safe!
Raul Lopez
Fear and greed are the emotions that have the most impact on traders and investors, they make us make irrational trading decisions, Can we get rid of them?
I don’t think so, they are part of the human nature. Think about this: why dot you jump into a lion’s cage? Because you are afraid of what could happen to you, right? So, this fear is keeping you alive, the fact that you are afraid is actually helping you. And know the question is, can we apply this in the trading environment? Can we make our fear to work on our favor? Of course we can.
Let’s put it into the trading perspective: when you developed your system, you defined what seemed to you a low risk trading opportunity (i.e. when the stochastic figure when from overbought to the neutral territory, or you got a candlestick pattern in the direction of the market condition, etc). What happens when you get in to a trade when there is no signal? You don’t have a low risk trading opportunity, aren’t you afraid of losing? We all should.
Now, I know most of the time it’s difficult to get rid of these emotions, even the most experience traders experiment them. The difference between experience and novice traders is that, the first ones don’t make trading decisions when there are in a trade, all trading decisions such as: when to close the trade, when to take partial profits, when to add to the position, were made way before they entered the into market, because they know that in the moment they entered the trade, emotions will kick in and will make them have an “irrational” bias, that most of the time makes them make wrong trading decisions.
So my advice here would be to have a well defined trading plan for everything:
This way you won’t have to make them when you are not likely to think objectively.
Trade Safe!
Raul Lopez
A few days ago I was talking with an old trading friend, he was asking me how come I didn’t take any trade that day, he had 4 trades so far and was thinking about going long EURUSD as we spoke (that day he took 7 trades over all).
To tell you the truth I was surprised how could he found good trading opportunities that day, to me, at least by how I saw the market, it was very difficult to trade that day. Most pairs were ranging, but not usual ranges, those undefined ranges where it’s very difficult to find consistent support and resistance levels, the market changed direction without prior notice, it just did…
I’m not going to lie to you, I thought that day: is there something wrong with the methodology I use to analyze and trade the market?
That day I waited for the market to give me a low risk trading opportunity (as I define a low risk trading opportunity) but I didnt get that setup, so I didn’t trade.
This is what I do: I first analyze the long term charts and decide which currency pairs have a good probability of moving in my direction, then I look for my signal on those pairs in the short term charts, if I don’t get my signal, I just don’t trade. That simple.
After much thinking, I concluded that I was doing the right thing. You see, our job as traders is not to trade every hour or day, but to trade when the likelihood of your trade increases.
By the way, my friend confessed that he won 4 out of the seven trades that day, but the overall result was negative… -113 pips.
Trade Safe!
Raul Lopez
Sometimes it’s difficult to determine when to trade a given currency pair. I know that if we try hard (if we force it), we’ll find a reason to trade any currency pair, but, is this our main goal? I don’t think so. Our main goal is to determine WHEN to trade. I always like to trade currency pairs, that have a clear long term and middle term condition. If I don’t see a clear long term view, I rather focus my risk capital in other pairs.
Here is one example, take a look at the next chart:
USDCHF
Can you determine the market condition here?
This is a clear undefined range, the market keeps bouncing back and forth from different support and resistance levels, making it hard to determine those turning points (where we try to enter the market).
This is a clear example of a non tradable pair.
Sometimes the market (or some currencies) doesn’t want to be traded, we are better off risking our capital on other markets (or other currency pairs), we have plenty of them anyway.
Our job as traders is not to trade every day, but to determine when to trade.
Good luck!
Raul Lopez
The cross GBPJPY is getting closer to a few trading setups, but first, the market needs to break important short term support or resistance levels. Please take a look at the chart below.
GBPJPY
My Trading Plan:
If the market breaks the short term resistance level around 156.74 (green resistance line), I will start to look for long opportunities, and all take profit levels will be placed below the long term resistance around 159.45
If the market breaks the short term support level around 154.87 (green support line), I will start to look only for short trading opportunities (will validate the head & shoulders pattern), and all take profit orders will be placed around 150.00
Good luck
Raul Lopez
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