USD / CAD - Probe for Weakness
By Eliseo Agas | October 17, 2007
Following up on my previous post, I think it would be a decent time to throw in a probing trade into USDCAD at this point (at the time of this posting).
A probing trade is a very small position that by itself is relatively inconsequential if it wins or losses. But the great thing about a probing trade is that it gives you a better feel for what the market is doing because you have money on the line. Additionally, once we get confirmation that sellers are stepping back in we can build into this making it a bigger position with only a slightly worse average cost for the overall position.
I’d be comfortable adding to this position on a break below the .9743 level.
Let’s sit back and see what happens next.
Tags: cad, currency trading, forex charts, USD
Topics: Better Use Charts - Use Charts Better | 1 Comment »
Buying when we should have been selling.
By Tom Long | October 11, 2007
Occasionally (hopefully not more than once) we find that we entered into the wrong side of a trade. We meant to sell, but instead we bought. After the few seconds of panic, we are left with a decision. What do we do now? Most professionals will tell you that whenever they find themselves in this position, they immediately close the trade and correct their error. Too many times a new trader will convince themselves that the trade may work out anyway if they stay in long enough. However, more often than not the loss just gets bigger and the trader just gets more frustrated. Now you find yourself losing when you should have been winning. If you immediately exit and reenter in the direction you originally meant to, you could quickly absorb that loss and start to profit. So do not hesitate in fixing these types of errors. If it costs you a little money, chalk it up to experience. But don’t let a mistake like this get out of hand and of course, try not to do it again.
Tags: currency trading, forex, forex trading, trading mistakes
Topics: Don't Trade Like This | No Comments »
3 Trades To Protect Yourself Against the Falling Dollar
By Ian McAfee | September 25, 2007
The dollar continues to fall and traders need to protect themselves. Below are three possible trades you can make to improve your wealth globally, not just in the United States.
1. Short USD/CAD
As oil has risen over the past five years, so has followed the Canadian dollar. USD/CAD has cracked below parity a few times already, and has a toehold. Why stop now?
2. Long EUR/USD
There is nothing in the way of the Euro currently. As with the rest of these trades, the United States Federal Reserve is helping out by lowering rates.
3. Short USD/CHF
The USD/CHF is in new low territory. Let your friend, the trend, make you some money.
Tags: currency trading, dollar
Topics: Ideas | 1 Comment »
Food For Thought
By Laetitia Vaval | September 21, 2007
I found an article by Tom Long on www.forextradingblog.com. He talks about using protective stops and his article identifies one of the major DON’Ts that I’ve been doing on the demo account and that I briefly touched upon in some of my previous posts. I copy-pasted what I believe to be the essence of the problem: “Too many new traders use what they call a “mental stop”. They have a price level in mind where they would consider getting out if the market moves against them, but do not enter it into the trading platform. Typically, when the market does move down to that price, instead of exiting, they “wait and see how the market will react”. If the loss becomes larger, they then decide that they will exit when the market moves back to their original mental stop level. As the market continues to move against them, intentions about getting out turn to hope about the market coming back before they get a margin call. Many times, it is that margin call that determines their exit, not their own analysis”.
As I will be trading live very soon, I can not make that mistake again. I have to 1) use protective stops and 2) respect them. Hopefully, the fact that I’ll be trading with “real money” will be a good enough reason to not take such a useless risk !
Tags: currency trading, dow, forex, forextrading, trading strategies, wall street warrior
Topics: Wall Street Warrior | No Comments »
Never trade without a protective stop.
By Tom Long | September 20, 2007
After having identified your entry on a new trade, the next step should always be to identify the price level for your protective stop. The difference between the entry and the protective stop is your risk and represents what you are willing to lose on the trade. There is really only one guarantee in trading and that is if you trade, you will have losing trades. How you manage those losses will have as much to do with your success or failure as a trader as any other factor. Too many new traders use what they call a “mental stop”. They have a price level in mind where they would consider getting out if the market moves against them, but do not enter it into the trading platform. Typically, when the market does move down to that price, instead of exiting, they “wait and see how the market will react”. If the loss becomes larger, they then decide that they will exit when the market moves back to their original mental stop level. As the market continues to move against them, intentions about getting out turn to hope about the market coming back before they get a margin call. Many times, it is that margin call that determines their exit, not their own analysis. Sound familiar? I hope not, but this happens more than it needs to in the world of currency trading. You can avoid this by simply placing a protective stop in the market with your entry, which means you have identified and limited your loss to an amount that you have determined to be acceptable. A losing trade does not mean the trader does not know how to trade and is not something we can avoid by not using protective stops. We should instead limit those losses with the use of a protective stop. This way we can make sure we have protected our account balance with enough funds to take advantage of the next trading opportunity. We should judge our success by the results of a series of trades, not just one trade. Without identifying our risk and using a protective stop, we risk not having the funds to be around long enough to take advantage of a series of trading opportunities. By using a protective stop in every trade, we can help to keep this from happening.
Tags: currency trading
Topics: Don't Trade Like This | No Comments »
Morning Trade
By Laetitia Vaval | September 20, 2007
This morning I decided to range trade the GBPUSD. At around 9AM - the range was about 2.0047 - 2.0113. I got long at 2.00754 (had a stop at 2.0020) and exited my position 2.00845 a 9.1 pip gain. Got back in again at 2.0975 and out at 2.01155 - an 18pip. I traded the pair a few more times throughout the mornign and all in all was very profitable, but here again I could have made a lot more profit had I not been sitting in front of the computer the whole time. I kept looking at the 1-minute chart and second guessing my decision. Had i entered, a stop and a limit and walked away, I could have made over 700dollars in profits since my target price was 2.0136 which was hit a little bit later.
Also, I am short the USDCAD. I am going to hold this trade overnight since Canadian Retail Sales will be released at 8:30Am EST tomorrow morning. The odds of a positive surprise are pretty high since Canadian Wholesale sales were released this morning (+2.0% vs +0.5% expected), and wholsesale sales can generally be interpreted as an early indicator of positive retail sales.
Tags: cad, currency trading, dollar, forex, forex trading, gbp
Topics: Wall Street Warrior | No Comments »
CHF/JPY results
By Laetitia Vaval | September 20, 2007
So i just got in the office and checked on my trades from yesterday. Especially, the CHFJPY trade that I “forced” myself not to touch once I had entered it in the system. So my limit price of 98.25 was reached and i made a 24 pip profit ($207). This really shows the benefits of letting the trade work by itself instead of “irrationally” closing my position as soon as it starts ticking a few pips against me. My only regret in this case is to not have set my limit higher because CHFJPY traded all the way up to 98.50 before trading back down to the level where I had bought the pair. Something to consider for my next trade.
Tags: currency trading, dow, forex, forex market, jpy, trades, wall street warriors
Topics: Wall Street Warrior | No Comments »
The Worst Offenders: Pairs for Trading
By Tim Shea | September 14, 2007
I’ve been doing some data analysis for FXCM mini accounts over the past year, and have broken down client profitability by currency pair.
The very best pair in terms of client profitability was the AUD/CHF. Unfortunately, it is traded by only a few clients.
The top 5 pairs (of those with significant volume) with the best results for clients are:
- GBP/AUD
- EUR/USD
- EUR/CHF
- EUR/JPY
- EUR/GBP
So, what do they have in common? 4 out of 5 pairs are Euro pairs. Number 6 is USD/CHF, which is often the mirror image of the EUR/USD. With the exception of the GBP/AUD, these pairs are low-volatility and low-spread pairs.
It appears that range trading tends to be more consistent than other approaches. All of these pairs, with the exception of EUR/JPY, spent most of the survey time range-bound. They all feature strong support and resistance lines, giving range bound traders excellent and consistent opportunities over the past year. Strong support and resistance lines also let you trade with tight stops, giving good opportunities to use good money management techniques.
Now, the 5 biggest losers, starting with the worst:
- NZD/JPY
- EUR/CAD
- AUD/JPY
- CAD/JPY
- GBP/JPY
What’s in common here? The JPY. JPY pairs tend to have very high volatility, and can be brutal for many accounts. Most of these currencies are popular carry trade currencies, with often violent sell-offs. When they drop, they drop a
To compare the extreme losses of the worst pairs, you can compare AUD/CHF to NZD/JPY. For every dollar of average net profit on AUD/CHF, there were over $6.20 of losses in NZD/JPY.
Results are based on closed trades on FXCM mini accounts from 6/30/06 to 7/31/07 (13 months); rollover interest is not factored in.
Tags: currency pairs, currency trading, forex trading, forex trading blog, fxcm, worst currency pairs
Topics: What's New at FXCM | 6 Comments »
US Retail Sales
By Laetitia Vaval | September 14, 2007
As I wrote yesterday, I had a short position in the USDJPY when I left the office. At 12:30 GMT, the August US Advance Retail Sales came out at 0.3% ( vs. 0.5% expected). Although this number came out slightly below expectations, the real disappointment came from US Retail Sales LESS Autos (-0.4% vs. 0.2% expected). This number indicates that US consumers are spending less money and is reflected on the USDJPY chart (above) within minutes of its release. I was short from 115.320 kept my position overnight. The USD weakened this morning in light of the disappointing Retail Sales release and the USDJPY dropped to a low of 114.35. I decided to buy back at 114.51 as I was starting to see a reversal and the beginning of a new uptrend. I made a 81pip profit.
I am still holding onto the EURUSD position that I bought yesterday at 1.3894. As I write, it is trading at 1.385.
Tags: currency trading, eurusd, forex, forextrading, jpy, retail sales, wall street warrior
Topics: Wall Street Warrior | No Comments »
DailyFX Forex Radio - US Dollar Hits 22-Year Lows on Dismal NFPs - Has the Fed Been Forced to Cut?
By DailyFX Radio | September 7, 2007
· US Dollar drops on dismal NFPs - how bad was it?
· Things aren’t rosy in Japan either - Q2 GDP estimated to show a contraction
· Be sure to view the rest of the week’s event risk on the DailyFX Forex Calendar
To discuss these or any other FX topics with the DailyFX analysts, check out the Forum
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http://media.dailyfx.com/podcasts/FXRadioPM090707.mp3
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Tags: currency trading, dailyfx, dollar, forex, fxcm, jpy
Topics: DailyFX Radio Podcasts | No Comments »