FX TRADING STRATEGY
stop hunting. Te market ran up and cleared stops above the Asian range before coming back inside the range again ahead of the NFP data. Aſter the number was released some traders were caught on the wrong side of the market and if you are long and panic you will have to get out at the bid. Te market will go wherever there is enough volume to match all the orders and the most obvious level on the downside was 1.3000. As a side note, big round numbers become psychological support and resistance levels simply because the brain processes 1.3000 a lot faster than 1.2987, for example. Between 1.3000 and the old swing low at 1.2965 there was an air pocket and prices fell quickly once it dawned on everyone that the figure was not going to hold. Once 1.2965 was broken a ton of stops were triggered as illustrated by the red volume bar. Te bears had accomplished pushing prices to a level where they found sell stops and could get flat without moving the market adverse to their position.
CONCLUSION
Te FX market is a place where the little guy can have a big idea and make a fortune. All you need to do is to identify one pattern which has a positive expectancy and execute it whenever it sets up at a time of day when liquidity is good. In poker the
secret to success is not as much about winning huge pots as it is losing less when you lose and winning more when you win. Over time the cards will end up with an even distribution and it is up to you how to bet and fold in order to control risk. Hence the conflict is the one between the free will of the bet and the vagaries of the luck of the cards. Te fact that the FX market is open 24 hours a day makes it easy to control risk because there are no gaps and slippage is never really an issue. However, it is also an open-ended game where the odds are constantly shiſting. Certain times of the day are clearly not as favourable as others but if your strategy is based on identifying high probability setups in the European session and to trade risk appetite and mass psychology in the direction of the 30-minute trend then there is no better vehicle than the EUR/USD.
Chart 1.4 EUR/USD futures on March 7 and March 8 with stop hunting extraordinaire on display
42 FX TRADER MAGAZINE April - June 2013 Patric Tengelin
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94