Forex Trading Strategies
Saturday, July 08, 2006
Trading the NFP (non-farm payroll) with the CCI indicator
Firstly, excuse my unwillingness to discuss about whether it is good or bad to trade the NFP. Instead I'm going straight to the point. It's a well-known fact that most forex traders avoid this moment of insane market volatility, happening once a month. But there is a little group of traders that would not miss a chance to win (or lose) some quick pips during this or other news events. Here I'll point out my observations about how to actually trade the payroll, based on the first 7 months of 2006, of which I demo traded the February and July payrolls.
The pair and timeframe of my choice are EURUSD and 5 minute. For entries we'll use pending orders (this is one of the more common ways a lot of people use) while for exits we'll use the CCI indicator. I chose the CCI indicator because it is one of most volatile classic technical indicators and because a lot of people (especially developers of automatic trading systems) have found it good for exit signals. (Please take into consideration that many retail brokers won't fill pending limit orders during the first minutes of NFP release, actually there are still some brokers that would freeze during the first minute and make a big gap in the chart. If you have quick fingers, just open the trade dialog with the "buy" and "sell" buttons and click one of them as soon as price spikes up or down. That's what I do.)
The following strategy is simple and almost mechanical. We won't be talking about support and resistance levels and how they may (or may not) help our NFP trade. We won't take into consideration the actual payroll number. And I'm not going into details about money management, we'll talk about pips only.
OK, this is our plan:
1. About 1-2 minutes before 8:30 EST (New York time) enter two pending limit orders, one for long, 20 pips above current price, and another one for short, 20 pips below current price. Take Profit for each order is 50 pips, Stop Loss is 40 pips. If you use the MetaTrader platform, you can use a script that will enter both orders, with the Take Profit and Stop Loss levels, only with a simple click on the script.
2. A few seconds after 8:30 price will spike up or down and you'll get a fill on one of the two orders. Note that depending on your broker and platform you may get requoted, so be prepared to act accordingly. You're also guaranteed to get some slippage, just don't pay too much attention to this (actually a few pips slippage is much better that getting requoted).
3. As soon as you have your order filled, move your attention to the CCI indicator. You'll be watching it for the next hour and act accordingly. During the first minutes after 8:30 CCI should be overbought (or oversold), way above (or below) the 100 (-100) level. Our simple exit rule is to wait for the CCI to cross back the zero line. Wait for a bar to close, as market is very volatile at this time and you may get stopped out too early.
Of course the best scenario is to get your Take Profit target hit. The worst thing that can happen is getting your Stop Loss hit. This also means that you'll have your second pending order filled. You may just delete your second pending order right after you get a fill on the first one, but at this moment there is a good chance that price will keep going in the direction of the second order. Out of the first seven months of 2006, there were two payrolls like this. We'll look into each month in detail now.
On each chart I've put some vertical and horizontal lines. The small horizontal green dotted line shows the price 1-2 minutes before 8:30. 20 pips above and 20 pips below it there are two green dashed lines - these are the pending orders. The red dashed line is the Take Profit level. The small vertical red dotted line shows the time of the NFP release, 8:30 EST. And finally, there is a vertical red solid line showing when a CCI exit signal is generated (a closed bar with CCI crossing the zero line). Ofcourse, this exit signal is valid only in case we haven't had our Take Profit hit before that.
Here we have a big retracement right in the beginning. I guess that CCI went very close to the zero line during the second bar, but hopefully it closed way above it. After that the trade would have gone very well, with a Take Profit of +50 pips.
This is one of those bad days when we get both orders filled. I traded this one on demo, though I didn't follow any strategy back then, and only took +14 pips. Following our strategy, we would have gotten -40 pips Stop Loss first. Then, after we get a fill on our second pending order, we would have taken +50 pips Take Profit. A total of +10 pips.
This is a tricky one again. There was a retracement for quite some time, during which CCI threatened to close above the zero line. Hopefully it crossed the line about an hour later, leaving us with a modest profit of about +20 pips.
And yet another interesting case. Here we have our CCI zero line crossed about 40 minutes after the first fill, which costs us about -20 pips. Then about 15 minutes later we have our second order filled (the second vertical red dotted line on the chart) and about an hour later we get our +50 pips Take Profit. About +30 pips total.
Finally a happy trade. Very quick +50 pips.
Another easy trade. Price got somehow close to the second pending order but then skyrocketed up. +50 pips here again.
I just traded this one on demo yesterday, following this strategy. Another quick +50 pips.
And that's it! As you can see, the NFP is far from being a 100% probability trade, but some knowledge about past NFP days always helps. I hope to have some free time to add more payroll charts from 2005 and 2004 here.
posted by Lyubomir Kovachev at 7:43 PM | 0 comments
Friday, July 07, 2006
Welcome to Forex Trading Strategies!
This is a place for everybody to share his own forex trading strategy (or the strategies he knows), and for everybody to see other peoples trading strategies. I am creating this blog with the hope that it will become a valuable source of information for every forex trader.
I encourage everybody to post an article here with his (or somebody elses) forex trading strategy. Please keep this holy place clean and free of scam. It's all about helping each other get better at trading the forex market.
Give a man a fish and you feed him for a day; teach a man to fish and you feed him for life. You think you know how to fish? Show us!
posted by Lyubomir Kovachev at 7:08 PM | 0 comments
A place for fellow traders to share their forex trading system
Forex Trading Strategies
Thursday, 20 March 2008
Dr. Wilde's Fast Forex Profits
As a newbie in Forex Trading, Forex Profits can be very profitable to you. In fact this is the first ebook I purchased online and have never regret it.
Dr. Jeffrey Wilde is an experienced trader and in this ebook, he guides you step by step to a quite simple strategy guaranteeing you to maximise your profits. Without any exaggeration you can grasp this strategy witihn 60 minutes. Be assured that the language used is very simple and easy to understand.
First, you are introduced to the Japanese Candle Stick to be used in charts. In that chart, Dr. Wilde helps you to locate a setup bar. From a personal experience, let me tell you that this is very easy to do. Even a kid can do that.
Next, you will be shown to get a reliable signal on the MACD indicator. This also is very simple. Within these two steps, you shall be ready to enter a trade.
The final step is to put a stop loss. This is very important because though this strategy is quite effective, remember that you will not win all trades . Jeffrey Wilde himself said that this forex strategy MUST NOT be taken to be the Holy Grail . Using Jeffrey Wilde's strategies, I was able to maximise my profits and the losses proved to be insignificant and manageable.
The BIG advantage of using this strategy is that you are provided with the personal phone number of Dr. Wilde in addition to the unlimited number of email supports. I wonder how many other online marketers would dare giving their peronal numbers.
The programme is also supported video demonstration and you feel like being taught in a classroom. This make the strategy taught to be even easier to learn.
Finally you are provided with a 100% money back guarantee, but I don't think it will be of any use to you as this this strategy is so simple that even a kid could learn to trade successfully.
If you are a newbie, I strongly advise you to start with Forex Profits.
Forex Trading Strategies
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Thursday, February 18, 2010
Can You Do Forex Trading as Part Time?
There are so many people who aspire to make a big or sudden jump into the riches or kingdoms through online forex trading on a part time basis. And to some it would be convenient as they will only spend a few hours on the computer. But the fat of the matter is that you cannot simply do this on the fly as there shift and changes in currency trading is more demanding than you can imagine. You need to be always on the lookout for better deals and also to make sure that what you have on your plate is safe and sound. But Yes, you can do it on a part time basis but you need to be very careful and have you eyes on your trades.
The market fluidity has now become very impressive due to the forex. The market is always handy because it does not set up a central organization to monitor the forex market. However, some traders are unable to sufficiently train or trade currency due to a conflicting overtime job or other obligation. This is because of the fact that these breakouts are rooted on the foundation of two realities about the price movement of forex that are not bound to change behaviour.
The Forex trading broker operates in both markets; you as an individual investor probably are familiar only with cash trading. The maximum rates of the currency are dependent on the confidence of the customer and on the economic strength of that country. The currency of the country is considered to be the economic value representative of the particular country. Forex funnel is the new product that is been launched by he forex market. This product has certain specialties.
This education will also guide you about the forms of orders that you can avail being a foreign exchange trader. It is advisable to undergo more and more tests as they are better for you. You must also keep observing the news. Most of the times, the news guide you that they are better breakouts. You may feel a little discouraged when the breakout happens. The only real important fact is to allow a proven rate of return in a set of rules that can be easily repeated.
The economist would try to focus on various types of indicators and it would try to manipulate the specific types of indicators. The rules and conditions associated with the forex trading systems are tested and implemented from a long time. Internet can also help you to gain the connection about the Forex. The popularity of internet is increasing continuously. There are some websites which would charge you some fees for the services that are provided by it.
These track records are of little use and it can be used to respond to the profits in future. Thus, these records can be used for finding future profits. Fundamental analysts allow unique indicators, like growth rates, interest rates, inflation and unemployment, and desire these to estimate future performance. But this would not provide you guarantee that you would be able to earn the fruits that you use to earn. Day trading means that all positions are usually closed by the end of the trading day whether you require a profit or a loss through your day trading activities. The forex agent would buy a significant amount of a particular currency. In the past years, only the banks had the authority to set up an access in the foreign exchange markets.
With Forex trading you would become rich in limited span of time. Thus, you should be careful in selecting the course of diversification. Today to be a forex trader all that you desire is a computer setup to multi screen investing servers, the number of the casual or evens serious home based forex traders has grown a great deal of late and this is because of the internet and the popularity of certain commodity trades. With the right route, knowledge, money management, and attitude you should be fine. his would help you to bear down upon the confidence and invest smartly in the market of forex. Thus, your confidence would aid you to invest in big amount in the market of forex trading.
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