A strong end to the week
I've adopted a Forex strategy for Friday morning. I trade on the news, and usually with a position lasting only 5-10 minutes. This has turned-out to be an excellent money-maker for me and an exciting way to end the week. This Friday was particularly volatile with the jobs report coming in at 8:30AM EST.
I readied my trade, EUR/CHF was the first pair I ever traded and has always been a strong pair for me. Looking at the RSI I could see it hovering at 70 where it had been hobbling along for some time now. A headline came-out suggesting a short position on the pair. Looking at the 60 min, 30 min, 15 min, and 5 min chart I knew the time was right.
The pair started to fluctuate a lot, bouncing around in place. This was my moment, the news was getting ready to break and the pair was ready to blow off some steam. I entered the position at 1.5870, waited a few minutes and then...BOOM. The pair dropped like a rock. In a matter of minutes I closed the trade as my profits were far and above what I had expected to make on this trade.
This style of trading is not neccesarily day trading as the trades really happen in a matter of minutes. I think this would more aptly be named "Speed Trading" as you are playing on quick snaps in the market to lock in huge profits. As always I have a stop set so if the pair does decide to snap in the other direction, my losses are minimal.
While I do set a tight stop for this kind of trade, I don't set a limit. When I first tried-out this strategy I set a limit that was 4x my stop. I found that almost every time the jump would blow past my limit in a minute or less. While I would make a nice profit, I knew there was much more potential. I decided to watch the trade and sell once it hits the bottom and starts to bounce back up. This usually leads to profits well over 10x my stop. Which means that if I use this strategy 10 times and am only right twice I still make money.
I have included some of the charts from this trade below so you can witness the victorious end to my week.
I readied my trade, EUR/CHF was the first pair I ever traded and has always been a strong pair for me. Looking at the RSI I could see it hovering at 70 where it had been hobbling along for some time now. A headline came-out suggesting a short position on the pair. Looking at the 60 min, 30 min, 15 min, and 5 min chart I knew the time was right.
The pair started to fluctuate a lot, bouncing around in place. This was my moment, the news was getting ready to break and the pair was ready to blow off some steam. I entered the position at 1.5870, waited a few minutes and then...BOOM. The pair dropped like a rock. In a matter of minutes I closed the trade as my profits were far and above what I had expected to make on this trade.
This style of trading is not neccesarily day trading as the trades really happen in a matter of minutes. I think this would more aptly be named "Speed Trading" as you are playing on quick snaps in the market to lock in huge profits. As always I have a stop set so if the pair does decide to snap in the other direction, my losses are minimal.
While I do set a tight stop for this kind of trade, I don't set a limit. When I first tried-out this strategy I set a limit that was 4x my stop. I found that almost every time the jump would blow past my limit in a minute or less. While I would make a nice profit, I knew there was much more potential. I decided to watch the trade and sell once it hits the bottom and starts to bounce back up. This usually leads to profits well over 10x my stop. Which means that if I use this strategy 10 times and am only right twice I still make money.
I have included some of the charts from this trade below so you can witness the victorious end to my week.
posted by Morgan at
8:20 AM
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