I dont know if this against the rules... - page 4
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Currency Trading Strategy Number 37:
I recently had a customer ask me what to do when price had headed north through all the pivot points for quite a run and lots of money in
the bank, stalled at R2, and then continued its journey north. Answer: R2 is normally resistance. When price penetrated R2 headed
north, and couldn't fall back through R2, R2 became support. It was a buy signal when price decided to continue its trek north.
Remember, price is King. It will go where it wants to go. You must follow its lead, even if it already has put in quite a tear in one
direction – even beyond its average daily range. It will keep going in that direction if it wants to. Remember, currencies trend well. Don't
buy too soon, don't sell too soon. Wait for convincing evidence that it has made up its mind. In this case, price played with R2, but never
punched down through it with any sort of notion that it wanted to reverse course. Once it made up its mind to continue the journey
north, all you had to do was follow suit. Don't fall prey to oxygen starvation at high altitudes like R2. Trust your indicators. Do what
they tell you. This isn't about falling for your gut feel that price has gone "too far" up. It could go even further – a lot further, in this case
– if it wants to.
Currency Trading Strategy Number 38:
"The more I practice, the luckier I get." (Wayne Gretzky)
Currency Trading Strategy Number 39:
You should not execute trades, as a general rule, in between pivot points. That area is NO MAN'S LAND. Wait for price to make up its
mind on direction at a support or resistance level, supplemented by other indications of price direction – "reading bars," MACD
divergence, reaction to pivot point, trendline breakouts.
Currency Trading Strategy Number 40:
Don't use MACD for anything other than divergence. Recently, MACD on the 15 was trending up, leading unsuspecting traders to believe
that price was headed north. However, price did a u-e at the main pivot point, and headed south to find the other end of its range at
S1. You wouldn't see this sudden shift in MACD, because it is a lagging indicator. So, to summarize, just use MACD for divergence and nothing else.
Currency Trading Strategy Number 41:
You should only take trades in and around pivot points – not in between, as stated previously. When price action centers around a
pivot point, then take a look at the five minute to see what's going on behind the scenes. Because, you should have been focused on
only the 15 min up to the point of price interaction with the pivot point. Now, you want to pay attention to what price has up its
sleeve. In the above example (40), price faked out unsuspecting trades when it trended up through the main pivot point, only to tank
as it did a price rejection bar on the 15 min chart. Of course, you wouldn't have seen this coming if you were only looking at the 15
min. You would have seen the price reversal on the 5 min, and been ready to head south with price.
Currency Trading Strategy Number 42:
The absence of divergence between MACD and price simply suggests that MACD is confirming that the price trend is intact. But, don't be
fooled by this synergy. Please review strategy number 40 to see what I mean.
Currency Trading Strategy Number 43:
Resistance levels (M3, R1, M4, and R2) are levels (or sell zones) where sellers can be expected to outnumber buyers, and push price
lower. Correspondingly, support levels (S2, M1, S1, and M2) are levels (or buy zones) where buyers can be expected to outnumber
sellers, and push price higher. These expectations are based on my program's interpretation of buyer/seller interaction in the last
session. I think you will agree, after close inspection of the results of my pivot point calculations, that price hesitates, pauses, and decides
on its course of action in and around pivot points. That's why you should never enter trades in between pivot points, while price is in
transit, and in a state of transition.
Currency Trading Strategy Number 44:
Don't let anybody scare you off the forex by saying it is too risky. It is actually less risky than trading any other market, that is
exchange-based. The forex cannot be "engineered," as stocks and commodities can be. Also, being a true seamless 24-hour market,
there is less of a chance of your stops not kicking in. That's because the forex is highly liquid, trading ~US$1.5 trillion each and every
day. It is the most liquid financial market in the world, bar none. And, you get good fills, with fast execution times.
Currency Trading Strategy Number 45:
On May 23, we have had a rather unusual day, in that price "reached" beyond its average range to put in 135 pips in two hours,
just above R2, after starting its climb at the main Pivot Point. The Euro reversed course at the double top, and broke down through R2,
to mark the end of its run to achieve its average daily range, or better in this case, within 12 hours of the start of trading for the
current session. You would have noticed, of course, that the double top formation was also a "railway tracks" bar formation (if you just
happened to have been looking at bars, instead of candles). Those two patterns occurring at the same time are a pretty powerful
indication that price has run its course. So, keep your eyes peeled for price patterns per se, but also for combinations of patterns occurring
at the same time.
Currency Trading Strategy Number 46:
May 23 was supposed to be an M2/M4 day, given the up-close for the last session. But, the actual range came in at Pivot Point/R2.
Trading is "shades of gray" ladies and gentleman. Pivot points are not cast in stone. But, they are usually pretty close.
That day, the combination of Pivot Point and R2 achieved better than the average daily range for the Euro, well within the confines of logic
behind my pivot point definitions. The central Pivot Point becomes a buy point (read, support), when it is breached to the upside
convincingly, and so it became a reasonable starting point for price to commence its "range-finding mission" for the session. Likewise,
R2 is a sell point (read, resistance), and so it was a viable target for selling pressure, as the Euro exhausted its "search" for the end of its
range for the session. The main point in all of this is that the full range for the Euro was
achieved within the parameters of the pivot point logic and rules, which is the most important point to get out of all of this. By that I
mean that the four pivot points below the middle pivot point are all "buy" candidates, and the four pivot points above the middle pivot
point (including R2) are all "sell" possibilities. Achieving the full range, or more than that as was the case May 23, is what it's all
about, more so than strictly adhering to the M1/M3 or M2/M4 windows of "buying" and "selling" opportunity.
I hope you are beginning to see the power of pivot points in action. You only buy and sell in and around them – not in between, which is
what we call "NO MAN'S LAND." Not the place to enter trades. The only caveat here is where price forms patterns like we saw that day
above R2 with the double-top/railway tracks combination. Such a reversal phenomenon, especially with two distinct formations
occurring at the same time, cannot be ignored. But, what is significant here is the fact that this "double whammy"
took place after price had penetrated R2 to the upside, which to me looked like an exhaustion area – considering the fact that the last
point of resistance had been broken. Then, you look for convincing evidence that price is going to continue its trek north, or do a u-e, as
it did in this case, and head south. There are important lessons to be learned in all of the charts I post
at this site. So, please study them carefully. There are parallels, as I am sure you can see, between one session’s price action and that of
the previous one. In fact, given the nature of currencies trending well, every day pretty much looks the same, except for different
actual ranges and different low and high points (read, iterations of the nine possible pivot point lows and highs).
Price will always determine which set of pivot points it is going to work with, and that is why you always follow price's lead. That's also
why I call price the "fifth indicator," and perhaps the most important one of the five I work with. By now, you will have learned more
about the other four indicators, as you studied the previous currency trading strategy tips. Please study the charts I post at this site on a daily basis, as they
offer important clues that occur each and every day! If you understand what you see in those charts, you can't help but prosper with your trading on a consistent basis.
Currency Trading Strategy Number 47:
Don’t be greedy. I heard it said recently by one of my clients that he walked away from a session with only 150 pips in his pocket, and left
a lot on the table. Boy, for somebody coming from the stock world, as he did, he should been thankful for his catch of the day. The point
is, if you start out as a newbie looking to carve out only 20 pips per session, then anything beyond that is gravy, and it will surely come over time.
But, don’t forget the old adage, “Nobody can argue over profits in the bank.” If you see a profit, and want to take it, then do so, and be
happy. You’ll live to see another day, and take some more profits. Just don’t always grab for the brass ring. This isn't about always
hitting home runs. This is about having staying power, and taking one base at a time. When you have good reason to exit a trade, make your move, and be done with it.
Currency Trading Strategy Number 48:
Former Cleveland Brown's coach, the legendary Paul Brown, taught his football players a systematical/methodical procedure of
understanding tasks to attain successful results in face of unforeseen, variable difficulties.
So too with foreign exchange trading. Forex trading requires adherence to a set of currency trading strategy rules, which I have
set out at this thread. A wide body of research in behavioral finance shows that traders
consider the loss of $1 twice as painful as the pleasure received from a gain of $1. That's why they take more risks to avoid losses than to
realize gains. They end up buying high and selling low, contrary to conventional wisdom. Follow my currency trading strategy rules, and
you'll avoid getting a closely cropped haircut.
Currency Trading Strategy Number 49:
I had somebody ask me why I waited until 03:00:00am New York time to make my move, in the mean time missing potential in
advance of that timeframe. The answer is quite simple. That is when London trading kicks in, and that is generally the busiest session on
the forex. You will notice that is when the Euro usually starts its major trend to find its average daily range of 76 pips. Those pips are
usually put in within the first 12 hours of trading. Check it out for yourself. It happens each and every day, over and over again.
Currency Trading Strategy Number 50:
"Ascending Triangle": Price forms higher lows, and looks like somewhat of a horizontal line on top and a rising lower trend line.
This formation is normally bullish. You take its height at its highest point, and measure that distance from the upper line to obtain the upside target.
Currency Trading Strategy Number 51:
By combining "pivot point readings" with other signals – like divergence, multi-tops, trendline breakouts, triangular patterns, etc.
– you can pretty much tell where price is going next. Normally, I would say that you should only enter trades in and around pivot
points. But, given the large distances that can sometimes happen between pivot point areas, you then have to be on the lookout for
other evidence of future price direction. Like I keep saying, trading is "shades of gray." Nothing is always
black and white in this business. Trading is as much an art as it is a science. That all said and done, when price does encounter a pivot
point, you can see that that point has a powerful influence over price. So, always be on the alert for that next point of interaction
with the next pivot point, as it will have a distinct bearing on what happens next.
Currency Trading Strategy Number 52:
If you are trying to catch the major trend that unfolds during the London hours, but are afraid of getting your entry point figured out
correctly, wait to catch the next entry point, as the Euro "reaches" for its average daily range of 76 pips. The next entry point will occur
in and around the next pivot point that price passes through. Or, you may catch price as it tries to retest the pivot point it just went
through. That way, you won't run the risk of getting in too early, when the trend tries to unfold in early trading. Sometimes, price
fakes you out, and goes in one direction for a while, and then reverses course, before finally picking its direction. My favorite
saying is, "He/she who procrastinates wins." What you are giving up, of course, are those initial pips of the trend, which may amount to,
say 30 give or take, but you are more sure of capturing the remaining 46, as the major trend of the session matures.
Currency Trading Strategy Number 53:
I would like to remind you that the pivot points above the central "Pivot Point" have a "sell" bias, and the pivot points below the central
"Pivot Point" have a buy bias. These biases hold true unless price action turns a pivot point's bias from sell to buy or buy to sell – i.e.,
from resistance to support or support to resistance. The other important point to make is that when the major trend
reveals itself, as it did on that day (and does every day, within 12 hours of the start of trading for the session), you should think along
the lines of the bias. That day's bias in early trading was "short." Meaning, you should have forgotten how to spell the word "long."
Scalpers want it both ways, but that doesn't work in the forex – unless, of course, you want a short haircut. I say this because
currencies trend well. Don't second-guess the trend until it reverses itself with bona fide signals. In other words, don't sell to soon, and
don't buy too soon.
Currency Trading Strategy Number 54:
Keep those trading journals going! If you always trade the way you always traded, you'll always get what you always got.
Currency Trading Strategy Number 55:
There is nothing that says you have to trade often, or even every day. In other markets, most professional traders catch only three to
four really great trades a week, if that! Not so with the Forex. Here, the timeframe is more like a day. However, if you don't see any
"ironclad" trades, then don't trade. Turn if off and go golfing. Slow down, and drive the speed limit. This isn't a race. After all, you
are in control of the market, not the other way around. Don't feel pressured into doing something you feel uncomfortable about. Wait
for those "perfect set-ups" to make your move. Same goes for those "bad-hair days." If you are feeling out of it, sit on your hands, or go
do something else. Take charge of your trading life, before it takes charge of you, and your money.
Currency Trading Strategy Number 56:
I often get asked what parameters I use for MACD. I use the standard default settings. They work just fine. After all, all you
should be using MACD for is divergence.
Currency Trading Strategy Number 57:
I have said it before that you should only trade in and around pivot points. The only exception to that rule is if you see a trendline
breakout or a bar pattern, like price rejection, that gives a clear signal that price is about to reverse course. If price is in between
pivot points, and you are not sure what to do, don't do anything! If there's nothing to do, don't do it. Patience is the hardest thing to
master in the forex, or any market for that matter.
Currency Trading Strategy Number 58:
The major trend for the Euro usually starts revealing itself as the London hours kick in. Up to that point, price may "bait and switch"
you into thinking it is going one way, when in fact it is setting up to go the other way. It can easily fake you out, before the London hours
start to unfold. So, be patient and wait. Look for clues coming out of the previous session as to where price might be going ultimately. Did
you see a "head and shoulders" pattern? Did you see a triangle pattern? Do you see price trending in any one direction over a period
of time. Do you see any divergence in MACD (on the 1 hr and 15 min charts)? Do you see any channels, where price is looking to break
either way? Play Sherlock Holmes. A little bit of detective work will go along way before you dive into the new session. Like the Boy
Scouts say, "Be prepared!" Be in charge of your trading. Put your emotions in your hip pocket, and save them for later. Run your
trading as if you were running a "bricks and mortar" business. Same principles and rules apply. No different. This is not about betting and
gambling. This is serious business. After all, your hard-earned money is at stake. Protect it at all costs.
Currency Trading Strategy Number 59:
I have people asking me all the time why I don't post my trades in real time, or why they can't call me while I am involved in my own
trading activities. The answer is quite simple. This page is dedicated to my belief in the old adage: "Give a man a fish, and feed him for a
day - teach him how to fish, and feed him for a lifetime!" Plus, it would be very stressful and time consuming for me to take
time away from my own work (and quiet time) to interact with a discussion forum. I am sure you will understand my position on this.
I have customers in over 30 countries, and it would be a nightmare for me to react to each and every nuance that came along. A chat
room is in our business plan, but at this writing, I don't have any idea of when that might happen. When it does, I will certainly give
you lots of advance warning. I teach people how to fish. I don't give them the fish. I can remember when I first learned how to trade. I had my mentor sitting
right by my side each and every step of the way. Then one day he upped and moved, and changed cities. He actually moved to a
remote and secluded island to get away from city life. Nice move for him, but it left me in a state of panic. How could I possibly survive
on my own? I can tell you, ladies and gentleman, that I really learned how to trade when I had to do it on my own, and those were
real drops of sweat rolling down from my forehead all over my face. This is about you and the market, and you mastering your innermost
psyche. Anybody can learn to trade the forex my way. But, what will get you every time is that little inner voice doubting your every
move. And, then there's fear and greed that will bite you real hard too. It's the psychology of your mind that you must master. You
must become disciplined and patient to a fault. You must react only to bona fide signals, that I teach here. Otherwise, you would be
better off heading out to your local casino, and taking your chances there. The forex is not about gambling. It is about running a business,
where there will be gains and losses. Your every effort and constant struggle should be to get a grip on those times when price goes
against you. You are in charge. You can get the upper hand on price by trading "smartly," and using good money management.
Getting back to going solo without an instructor at your side during each and every step of the way, I recall a friend of mine telling me
how he learned to fly. After several practice flights with his instructor in the cockpit with him, they landed back at the airfield, and the
instructor turned to Pal and said, "Now, it's your turn to take it up. I'm getting out. You're on your own buddy." Talk about anxiety and
stress. Well, Pal took off and landed all by his little 'ole lonesome. But, he was pale and his knees were knocking when he got out of the
plane back at home base. He has soloed ever since. It's his passion now. There's something about being able to do it yourself, without a
partner holding your hand all the time. It's called "confidence boosting." If you can fly or trade by yourself successfully, there
probably isn't anything else in life you couldn't do equally as well. Actually, Navy pilots who land on aircraft carriers make the best
traders. But, that's another story for another time. I can tell you my friend learned more about flying in that one solo
session than he did all the times his instructor went up with him. Same with trading. You can do it. Just believe it so. Dedicate yourself
to becoming a master at it. Analyze, read, study, think. Ask questions. There is no such thing as a stupid question. Become
passionate about your trading. Don't think of it as a get-rich-quick scheme. Do it because you love it. Do it as if you would do it
anyway, even if you weren't making money. There has to be an element of fun in it for you. If it's all work, and no play, well you know the answer to that one.
Currency Trading Strategy Number 60:
Don't get hung up on reading bars when you think you have caught the major trend. Once the trend is unfolding, you then look for a
place to enter - around a pivot point. You look to reading bars to signal a change in the direction of the major trend.
A double top in a downtrend means nothing. A double bottom does. So, a price rejection bar or double bottom in a major downtrend
would signal a short-term reversal, and that's all. But, once you see the major trend unfolding – say, on the short side – you pretend you
don't know how to spell the word long. Stick with the overall major trend that is unfolding.
These comments relate specifically to the beginning hours of London trading, which is when the major trend reveals itself.
Currency Trading Strategy Number 61:
You need to get to the point where, when you look at a chart without any visual aids, you see indications as to where price is going. This
has to become "second nature." At that point, you can trade with ease. And, your stress level will go down, because you will be in
control of the market, not the other way around. This only comes with practice, day after day. This takes patience, and staying power.
You must hang in there until you get it. Winners never quit; quitters never win.
Currency Trading Strategy Number 62:
At first, if you are fearful, don't trade until you see what you consider to be an ironclad set-up that you are familiar with – an easy one.
That may mean waiting out a session or two, but that's okay. There's no rush. I find with some people they seem to have to prove
something to themselves or someone else. Some people think they have to scalp all day long for some reason that is beyond me. After
all, you are in control. Take your time. Relax. Enjoy it. Sooner or later, you will see a bona fide set-up that you recognize, and bingo
you're in. When in doubt, do nothing. When there is no doubt, do something, do anything – pull the trigger.
Currency Trading Strategy Number 63:
Unfortunately, you will not always get all the signals you need to pull the trigger. After all, this is as much an art as it is a science.
Youcannot always be 100% sure that you are doing the right thing. If you wait forever to get all your ducks lined up, you may wait a long
time. My favorite analogy goes something like this: Pretend you are sitting in your garage at home wanting to go to work, but you are
waiting for all the street lights along the way to turn green before you pull out of the driveway. Guess what folks? You'll never get to
work. Same with trading. Sometimes, you just have to make an educated guess (based on the currency trading strategy
recommendations contained at this site) and go with it. You won't always be right, but this isn't about being right. It is about making a
decision, sticking with it, and reversing course if you have to. Accept getting stopped out as God's way of kicking you to a higher level.
Just one more step to success.
Currency Trading Strategy Number 64:
Thanks to Tom for this: There are two choices to be made – LONG or SHORT when a certain point in the session(M1, S1, R2, Pivot ... etc.)
is reached. The BASIC rule is BUY (go long) below the pivot in the S1, S2, M1, M3 zone and SELL (go short) above the pivot in the Zone
R1, R2, M2, M4. Obviously it isn’t as simple as this and other indicators such as MACD divergence, reading bars, trends, and
patterns all add to the question LONG or SHORT. Bang on Tom! Way to go!
Currency Trading Strategy Number 65:
I have said previously that you should make your buy/sell decisions around pivot points. However, for example, if price is meandering in
between pivot points and then does a double top, that would lead me to believe that price is going down. So, there are times when you
would want to make your move before waiting for a pivot point to be hit. Of course, there's nothing wrong with waiting for price to do so
and then reacting.
Currency Trading Strategy Number 66:
Thanks to Harry for this one: He indicated that I sometimes refer to "price rejection." And, what does that mean. It simply means that a
price reversal bar has formed, causing the bar in the middle to have a higher high than the bars on either side of it. The price bar in the
middle is essentially a key reversal bar. And, what you have is a "swing change." That is, price is reversing course, and heading
south. The same holds true when price is reversing and heading north. You then have the bar in the middle of the three-bar pattern
with a lower low than the two on either side, and the one in the middle is the key reversal bar.
Currency Trading Strategy Number 67:
Repetition is the key to success in any endeavor in life, including trading the forex. The more you practice trade, the more you trade
real money, the better you get. You just have to keep at it - over and over and over again. Persistence is the key. You're bound to get
better at something if you do in constantly and don't quit. Don't let the market psyche you out. When you have a down day, just treat it
as experience. Lessons learned. But, try to learn from your mistakes. Keep those journals going. If it's not written, it doesn't exist.
Currency Trading Strategy Number 68:
I get the impression that some of you are not paying enough attention to trendlines. They are very powerful. Price WILL change
direction when it breaks the trend, regardless of what other indicators may be telling you. So, draw them, and let them be your
guide. REMINDER: In an uptrend, as we saw June 25/03, as long as the trendline holds, buy the dips. In a downtrend, sell the rallies. In
an uptrend, don't look to go short EVER! In a downtrend, don't look to go long EVER! Plain and simple.
Currency Trading Strategy Number 69:
Thanks to Stu G. for this one. I have been harping on using MACD only for divergence. But, Stu is right. I do on occasion, as I did June
26th/03, use MACD to confirm the trend. If the price trend has been consistently down over a period of time, then it could very well be
that when price tries to go counter-trend, it may just be a retracement or a temporary move in the opposite direction. I usually
like to stick with the major trend. In a downtrend, sell the rallies; in an uptrend, buy the dips.
Currency Trading Strategy Number 70:
I was asked by some of my readership what happened Friday, June 27, with all the wide-range bars on the 15-min chart. That was a
tough day to trade, even for seasoned professionals. Lots of whipsawing. Lots of stops got taken out. Trading patterns were
dominated by end-of-quarter positioning. A good day to stand clear. So, be prepared for the next end-of-quarter, and the one after that,
and the one after that, etc. Mark those dates on your calendar. Trading is as much about being organized and prepared, as it is about being good at it.
Currency Trading Strategy Number 71:
Marathon runners have only one thing on their mind when they are running – to cross the finish line. They NEVER look back. Same too
with trading. You should focus on surviving for the long haul. Sure, you will stumble and fall. But, just pick yourself up, just yourself off,
and carry on. Winners never quit, and quitters never win.
Currency Trading Strategy Number 72:
Beware of holiday situations like the long July 4th weekend. Trading tends to be thin, and it is difficult to produce meaningful pivot points.
Best to just go golfing, and forget about it. There's nothing that says you have to trade every day. Get a life.
Currency Trading Strategy Number 73:
If you are having trouble with your entry points, I suggest you try waiting until you see a hammer or a spinning top, and then pull the
trigger. You may wait a long time, but at least you will be sure of getting a good entry point, as these particular candles are powerful
precursors to a shift in price direction. Have a look at any chart and see how many of these candlesticks you can pick out. You might be
surprised at how many there are.
Currency Trading Strategy Number 74:
I just returned from a meeting with a group of young traders who have been at the forex for the past two and a half months. They are
making steady progress, and I am extremely proud of them. I thought I would pass along their observations that may prove helpful
to your own trading. They have backed off short-term trading, and are more into position trading the forex – using a longer timeframe –
taking cues from the 1 hour chart. They also believe that signals that occur on that chart are more powerful than those on the 15 min. For
example, a signal on the 1 hour would have more weight than an indication on the 15 min. Basically, what they are saying is that you
should wait on a trade for confirmation on the 1 hour chart before pulling the trigger, unless of course you see an ironclad setup on the
15 min chart. Trading is shades of gray ladies and gentlemen. These ideas are working for them. That doesn't mean to say you can't
experiment on your own. If you do and find something that works for you, please let me know, and I'll share it with the rest of the gang.
Currency Trading Strategy Number 75:
Clarification re Aug. 22/03 chart, thanks to Bill: Bill quite rightly pointed out in the chart for August 22/03 that there were hammers
at 3:01 and between 5:01 and 6:01 that didn't take. My answer to him was that such a candle should be complemented by some other
indication of a shift in price direction. For example, in the cases he cited above, price did not break the down trendlines - so, in effect,
the hammers' supposed effect was nullified. To conclude, bar formations that should signal a change in price direction should be
accompanied by other signals, including pivot points. In other words, what happens to price around a pivot point when you see a hammer?
Does the pivot point support what the candle is saying? Thanks Bill for this.
Currency Trading Strategy Number 76:
I was recently asked where one could find volume figures for a currency. None of the popular sites carry it. Nor is it necessary as the Forex is a very liquid market. Volume is somewhat redundant anyway in that regard. You just need to use technical analysis to trade the Forex.
Currency Trading Strategy Number 77:
Pay attention to that news. I had been calling for an advance in the euro and Swiss franc and, sure enough, they both popped on bad unemployment news in the U.S. September 5, 2003. News is not noise in the Forex.
Currency Trading Strategy Number 78:
There are “talking” bulls and bears and there are “real” bulls and bears. The real ones are reflected in volume and open interest. But,
these numbers are not available for inter-bank currency trading. However, they are reported for futures markets, which represent a
good proxy for sentiment because they are primarily a vehicle for speculation.
Turning points in currency markets often coincide with extremes in open interest levels, which represent extremes in speculation. The
key here is to watch for extreme levels and extreme changes in both open interest and volume to signal a possible change in trend.
Open interest numbers are of little use intraday. However, knowledge of a change in trend or extreme speculation in a particular
currency based on open interest and volume can be valuable information for any trader in any time frame. That’s where an
understanding of how COT works can improve your chances of detecting the underlying bias to a particular FX currency based on its
futures counterpart, and anticipating its next move. As at September 2/03, the commercial traders were extremely long
with their net futures positions on the euro FX and the Swiss franc FX, versus the funds, which were extremely short. When you see
such extreme divergence between these two camps, you know that price will probably follow the commercial traders’ lead.
The euro FX and Swiss franc FX represented good position trades to the long side at that time. A good buy-and-hold situation for position
traders. Sure enough on September 5/03 we had bad unemployment numbers coming out of the U.S., and both currencies popped. Who
could have guessed?
Currency Trading Strategy Number 79:
I think there is a misconception out there that you have to trade only the 15 min chart. You can also trade off the 1 hr and daily charts. It
just lengthens the cycle. For example, when I called the euro and Swiss franc to rise, you could have taken a position on the daily chart
and rode it up. That's all I'm saying. Likewise, you can wait to take a position until you see a valid entry point on the 1 hr chart. Etc.
Currency Trading Strategy Number 80:
For newbie traders, it is probably best to steer clear of Mondays, the day after a holiday weekend and end-of-quarters where there is a lot
of position squaring going on.
thats the main rules ive been using... so i will post some system,one by one... but please dont ask me complicated questions for i am juz a newbie here. juz try it because i think the system is so simple...
Good job, thanks
regards,
masemus
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more i read :: more i know :: that i know nothing