Forex Market Commentary For FX traders
It's been a good week for crude oil traders on the back of an OPEC freeze. WTI climbed some 7 Dollars on the week in a massive upwards movement as US Dollar continues to halt on the basis of mixed feelings about the growth of the US economy. Although the Dollar lost ground against the Euro and the Yen, the slippage could only be construed as short term and the continuous zigs and zags on the daily charts opens up abundant swing trading opportunities. Swing traders usually take a 3 days (or less) horizon based upon defined entry and exit points. The Euro and the Yen gained 200 pips on the week. With this understanding in mind it becomes a moot point as to why traders should look at intra-day trading carving pips on micro sessions when over the week they stand a better chance.
In a 46 week trading calendar, assuming 1 trade is executed per week, the laws of averages dictate 23 losses and 23 gains. Now, assuming that stop losses are used and that the trader is not foolish enough to re-enter a trade if the trade backfires, then with a 50 pip stop loss in mind and 100 pip gain target in mind, that would then translate into 100 pips x 46 gains and 50 x 46 losses for a year. That would be 4600 pips gained and 2300 pips lost in a year, or a net 2300 pips on the basis of 1 trade taken per week.
Whilst the swing trader usually marks 1 trade per week, it is not impossible to uncover 2-3 choice trades a week. However, I would not be tempted to enter currency markets with thin liquidity, whatever the opportunity. If you follow this formula and work with the major currencies and work very selectively and weave in and out of the zigs and zags then indeed the swing trader could work better than any robot automated system day in, day out.
Please note that in the long term currency movements are mostly affected by interest rate activity and comparative stages in economic cycle. but within that landscape of direction, the zigs and zags will appear much louder on a day chart than for intra-day traders. I would encourage traders, therefore, to only look at entry positions with a swing trading formula in mind and not for 1-2 hr position taking.
Please turn to Bloomberg for global bond yields:
http://www.bloomberg.com/markets/rates-bonds
USDX 94.476 +0.323 +0.42%
EUR/USD 1.132850 -0.000330 -0.03%
GBP/USD 1.30745 -0.00630 -0.48%
USD/JPY 100.2160 -0.0560 -0.06%
USD/CHF 0.960300 +0.004285 +0.45%
10 yr US T-Notes 131.921875 -0.453125 -0.34%
Crude Oil 49.04 +0.15 +0.31%
Gold 1341.435 -6.225 -0.46%
SP500 2183.87 -3.15 -0.14%
Dow 18576.47 -37.05 -0.20%
1. Always use your own better judgment as an FX trader and try to build a picture of trade logic combining both technical and fundamental understanding of the Forex markets.
2. Use Day Charts Japanese Candlesticks as the preferred interpretation of daily price action.
3. Use FX trading as 50% of your trading plans and balance with safe conservative wealth building plans. Please read:
Consistent Wealth Building Program
Proper Planning Prevents Poor Performance.
Do not rush but plan out your Forex trading career to consistently become profitable and successful.
Pieter Bergli - Trader X16
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Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.
CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
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