Go Euro Go!

Great trade last night that hit my limit while I slept. There was a lot of speculation around the Euro yesterday and many factors that favored the bulls. One of the major events that made me feel confident in this trade last night was U.S. inflationary data. With a fear of inflation and an end to the interest rate decreases investors started to run out of the U.S. markets, and quickly.

As people fled the stock market the currency market started to feel some movement once again away from the dollar as the large institutions started putting their money back on other currencies. Whatever gains we expected the dollar to have would soon be wiped-out.

Looking at the charts I could see that the MACD lines were just about to cross before I went to sleep. The RSI was still high but all sources indicated that the Euro was going up. I went long on EUR/USD and here's what I woke-up to:

Like I have said before. You don't have to be right every time. I've had 2 trades that went sour this week and now this one that did very well. Since I am currently using a strategy that only requires me to be right one out of every six trades this means that I just profited about triple what I lost - that's the kind of math you'll want to do to stay ahead. It's always important to stay focused on not become overly excited when you "hit it big" - this is not gambling. By making well-educated trades based on the news coupled with technical analysis you too can wake-up to the glory of a trade like this!

How to avoid bad advice

So I've given a few good examples of how good industry-expert advice coupled with the charts can lead to some very nice profits. Now I thought it would be a good time to show you trades to avoid and when the experts might just be a bit off.

Take a look at the trade suggestion from this morning on USD/CAD

It suggests you take a long position at 1.0040 with a target of 102.35. Sounds like there good be some good potential there right? Well before you jump into the trade it's a good idea to look at the chart and see if you agree.


From the chart we can clearly see that the RSI is very high at just about 70. Looking back historically we can see that when the RSI hits 70 it quickly falls. Also looking at the MACD it just took a big jump up and is now in a place where behavior could be a bit unpredictable.

When I see a trade suggestion like this and a chart as shown above I know this is not a trade I want to be involved in. Forex trading is all about taking risks, but doing so with as much data as possible so it is a very calculated risk. You can lose a lot of money if you just follow the experts. So instead, be your own expert and make sure the trades you make not only correspond to the news and expert analysis, but also with your own common sense.

Friday Jobs Report

Thank heaven for the Friday jobs report. Sometimes the jump after an important piece of data like this leaves the opportunity to buy on a "false dip" as I like to call them. This will happen when a pair drops quickly only to work its way back up very quickly.

This is exactly what happened last Friday when the jobs report broke at 8:30AM EST. I was able to buy at the bottom and sell pretty darn close to the top in a 5-minute span. Can't say this works every time but when it does it sure is satisfying. I've included the chart below to show the sudden drop. I only plan this strategy with EUR/USD since it is by far the most volatile pair so has the quickest jumps from one extreme to the other. You can see on the chart where I bought the pair as well as my stop and limit. You will notice in this case I am actually running two trades so I could double-up on the profits.