Marc Walton on July 20, 2013
Hi, have summer ranges arrived yet? I am not sure, but there are
clues on some of the pairs that we could be on for the usual mid season
slow down. However, no need to panic as I have a very simple &
profitable “range trading strategy” that I will show you next week.Many traders struggle and lose in August but I have always found that it’s a fairly easy period to trade IF you can be flexible and adapt to the changing Market pattern. The hardest part is knowing if the ranges have arrived yet or is this just a temporary pause before one final move THEN sideways markets?
In recent weeks the markets have become more nervous and prone to periods of drudgery, followed by big moves as a result of news releases. I have explained many times about being careful around news and that you should NOT trade NFP Friday nor FOMC releases, nor interest rate decisions and the following press conferences, but what about other red flag news?
Tip Toeing Around News
Last week I was trading with one of my “one to one” clients. We were looking at a potential trade on the Euro/Gbp but there was $US red flag news due. We waited for the retail sales news to come out, saw that there wasn’t a massive over reaction and then took the trade from an area that had MULTIPLE reasons (all explained at the start of todays video). The Euro/Gbp is an easier pair than some of the others in that you would expect the GBp & The Euro to react in the same way to USA news? It doesn’t always, but the reaction wasn’t huge on the pair so we took the trade.
This was a low risk, 1:3+ reward trade with a lot of reasons to take it. I would not recommend trading so close to the news if there was only one reason or there had been a big reaction. Having said that later in the week there was more red flag news that pushed this pair up to the 0.8700 area I had identified last Sunday.
0.8700 is HUGE on the Euro/Gbp. I showed how we have a 5 year old trend line that has not broken and it was previous support and resistance and a whole number, in other words multiple reasons yet again. If you were unsure you could have gone down to a 1 hour chart and seen that for approximately 20 hours price bounced around in a 20 pip range. Was it risky? EVERY forex trade is risky, BUT when you calculate a decent potential risk reward, combined with multiple reasons then on balance it was a decent trade.
The thing to note here is that Pierre, Dean, Vassilis, Fotis and myself have been trading for over 40 years between us! That is a LOT of screen time. We teach you the theory and strategies but as I have said on numerous occasions you should learn to concentrate on and master a few pairs. I show in the video some of the characteristics of one of my favourite pairs. I “know” it like I do a quirky old aunt. I know when to trade it and when to walk away. Why? Because I have spent 1000’s of hours trading it. If you really want to master forex or any skill you need to put in the time.
Sometimes I will take a trade after news because it “feels right”. Other times I will walk away because it does not. I can not teach you that, you have to learn for yourself. Do I get right all the time? Of course not.
If you do not “get it” then just leave it alone and concentrate on mastering whichever strategy you have chosen to follow. If you put in the time and master a few pairs you WILL get a “feel” for it.
This is the advice I give to trades who have not yet achieved that state: Red Flag News (especially FOMC, interest rate news & NFP) Money & risk management: If you are already in a trade move your stop to entry or beyond if its winning, move stops nearer to price if its losing OR if you are really unsure close it. All these types of events have the potential to whip saw AND you may even see your stop being “jumped” if you are too near to current price.
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