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A Successful Non-Farm Payroll Report Trade

October 3rd, 2009 by Shawn Cannon

In my prior post I outlined a method of trading the NFP. I wanted to go over the very set up I described and show you how it actually works.

NFP

The arrow indicates the very candle when the NFP was released. As you can see the price took a huge dip down and it eventually retraced. After the close of the candle,  an inside candle appears. I marked this candle with a check mark. It was at this point we are no ready to get into the market. Where the price goes from here will most likely be the overall direction the market will take after this major news release.

The horizontal line illustrates where a feasible entry should be. As shown price was still a bit erratic, however price soon turned bullish. There was more than ample time to pull pips out with some good profits.

Price eventually started making its way back down and around the area where we initially entered the trade. The price spiked away from that and it eventually becomes a tradable morning star pattern. This would have been a great opportunity to enter a second trade. This strategy works as long as you remain mindful of proper money management.  Today alone would have profited over 100 pips.

Time to cash out and buy your loved one something nice! But don’t worry about having to wait a long time to get the money you earned. With AvaFX as your recommended broker, you can get a debit card that will allow you to cash out fast and efficiently.

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Trading the Non-farm Payroll Report

October 3rd, 2009 by Shawn Cannon

On the first Friday of every month, it is not business as usual for most traders. An important report is released that day: The Nonfarm Payroll report. This report is a tally of nearly 80% of the work force in the United States. The purpose of the report itself is to assist economists in determining the current state of the U.S. economy. The results of the report itself can also predict the future state of the economy as well.

What this means for the Forex trader is that this is a day filled with extreme volatility on the major currency pairs. If one is not careful, they can find themselves on the wrong side of the movement and find their position wiped out in a matter of minutes.

When price moves dramatically, people watch. It can possess an opportunity for traders to make a large sum of money in a short period of time, thus the attraction. However, as fast as money can come, it can also go. A trader needs to be extremely careful when trading on this day.

Being a long-term trader myself, I am cautious of this day, but I’m not ultimately put off by it. While the intraday trader might sweat it out, I more of less look at the overall picture and plan my current trades accordingly.

But you, oh yes, you .You want to take a piece of this action. So allow me to present to you a method to trade the NFP.

Open up a chart on one of the majors, preferably either EURUSD or GBPUSD. GBPUSD generally has more pip movement, so depending on your money management you may appreciate that pair. Scale down to a 15-minute chart. Carefully watch when the actual news is released. You’ll know to the second when it occurs, as the price will start jumping up and down erratically.  Now here is the important part. Do not do a single thing. Just sit and wait for 15 minutes. When the first candle closes, it typically is a fairly wide candle. The wait continues. You want to keep an eye out for an inside bar. Our entry will occur at the breakout of that inside bar. Grab some pips and get the heck out.

If you plan to trade the NFP, broker selection is extremely important. Slippage can occur when a price moves to quickly. It’s extremely important to be sure you get in on the price you want to get in on. What good is it if you enter the trade and find that your order was filled after price made its move?

One of the FX Trading Network’s recommended brokers has a solution to this problem. Easy-Forex has implemented a feature in their platform that will literally allow you to freeze the price. With this feature you are ensured that you get the price you want in the time that price is “frozen”.  Take confidence in knowing there is a forex broker that has made it easier to ensure your trading system stays true to its rules.

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Profitable Breakout Strategy

September 28th, 2009 by Shawn Cannon

It really does not take a lot of detail to create a successful strategy. The strategy itself sometimes is the easiest part of piecing together your complete trading system. In the example I will illustrate below, I can show you how to profit by only using two horizontal lines.

gbpchfbreakout

The above is a daily chart of GBPCHF. I have an arrow pointing at a particular daily candle of interest. That was an extreme bullish day. As seen a few days back, there was an area of extreme support. Price finally ran as fast and hard as it could away from that point.

The days following price was a bit indecisive and were looking to be bearing. Price eventually faltered back down to the support, however it started to rise again until it reach to the nearly the high of the candle I pointed out. This is clearly a new line of resistance.

So it’s at this point, we want to know which way price is going. Price starts to drop again, however, we already know that the support is fairly strong. We also know price is below a line of resistance that has shown an equal amount of strength.

So what’s a trader to do?

In this case, this is a perfect set up to illustrate a breakout trade. By drawing a line at the area of support and another at resistance, we have created a channel for price to move between. At this point we don’t care which direction price moves. We just want to it make up its mind and go one direction or the other.

As shown, price continued to be a bear. It eventually closed below the low of the candle we first took interest in. And now take note of the very next candle. Price made an attempt to head back up but was stopped at the line of support that is now looking to be a line of resistance. Price continues to falter from there.

A good entry would be below the low of the candle that closed below the line of support. If you were wise enough to wait out the retrace that followed you would have been able to pocket hundreds of pips.

Sometimes a trader does not have time to look at charts. As well, sometimes a trader does not have the patience to wait out trades. The FX Trading Network has decided to look out for these traders. They have recommended signal providers that can allow a trader to profit without having to do their own homework. While developing a trading system like the one I have can be both interesting and rewarding, the reality is that it certainly is not for anyone. However, do not feel as if you cannot partake of the trillion of dollars a day industry because you have no interest in drawing two horizontal lines.

Posted In Indicators, Trading Methods | Comments (0)

Trading Signal Update – GBP/USD Short – 440+ pips!

September 26th, 2009 by Shawn Cannon

How long do you typically hold on to a trade? Are you willing to carry it overnight? Perhaps even over a weekend? So many traders look to get daily action. They enter in and out of the market multiple times a day. Why such stress?

Now I have nothing against short term trading. I’m just at that point in my trading journey, where I don’t need the fuss. There’s much more to life than just sitting in front of a computer, and I for one want to check it out.

As a result, I am a long term. I prefer sitting back, monitoring the markets once, maybe twice a day, and continue on with my life. And let me tell you, I’m just as successful, it not more, than the trader that likes to grind in the pits of the day trading arena.

On the 16th, I made a trading call. We are now 9 days into that trade. Over that time the trade is now up over 440+ pips. Would you have been able to hold on?

Just three days ago, the pair began to retrace. It threatened to take nearly every pip of profit it was worth at that point. However, I didn’t bat an eye. Know why? I had trust in my trade. My technical analysis confirmed a bearish market, and I wasn’t about to let a little retrace push me away.

gbpusdsetupupdate2

I still believe there is room for this pair to still fall. I’ve drawn two downward trend-lines creating a channel. I do not have any intentions of leaving this trade until my profit target is hit, or the price closes above the top of that channel.

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Trading Forex with a Partner

September 22nd, 2009 by Shawn Cannon

Trading Forex is generally a lonesome project. It is a one-man team where all the responsibility of success and failure fall on the shoulders of the one lone trader. Hours upon hours can be spent watching the charts with no one else to talk to about Forex. In their daily interactions, traders find that most of their circle of influence has no interest in Forex. Quite frankly, it’s quite a boring subject and it’s kind of difficult to spring up a conversation about the use of Murray Math Lines and their relationship to Pivot Points with your buddy in the local pub. Many traders generally seek out other traders in pursuit of some sort of interaction. In this article I would like to address two areas where a trader can congregate with other like-minded traders.

Online Forums

There are dozens of Online Forums dedicated to trading Forex online. It is here that traders can find a other traders to interact with. A well-used forum becomes an archive of information for traders. Anything from trading tips to rants and raves can be found on Forums. Forums also make a great place to ask questions, as there is generally a larger range of audience that has an opportunity to respond.

One word of caution, forums generally allow anyone to participate in discussions. As such sometimes advice should be taken with a grain of salt. It is quite possible that a losing trader with an ego can present himself or herself as a successful trader. However, their advice is can be as good as poison. Be mindful of both the advice you receive as well as give.

Chat Rooms

Forex based chat rooms allow traders to interact with each other in real time. This can be valuable for the day trader as they can discuss market conditions as they occur. When seeking a chat room, it is important to find traders that trade in a similar style of yourself. There is no sense in discussing the long-term trends on a weekly chart if you are in a room with traders who scalp off of a 5 second chart. Likewise if you trade price action, little sense would it make to get into a discussion with a trader who has a chart painted full of lagging indicators.

Egos sometimes bump when it comes to live interaction. To keep the interaction neutral, it is best to refer to subjective means of describing profit targets, lot sizes, and stop losses. 10 pips to one trader maybe be ten cents, while to another trader could be hundred bucks. By sticking to talking about pips and not money, traders can better understand each other and remain on the same page.

I personally interact with a small group of traders on Skype. For the most part, we trade larger time frames and at times we differ on the direction of a trade. However, that is the important part as we can each hear the reasoning behind it. There have been times I avoided entering into a trade based on the communication and feedback I received from a fellow trader.

The FX Trading Network offers both a forum as well as an interactive blog for traders to seek the information they need to succeed. Perhaps you even have trading tips to share with others. The forum is open to all traders.

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