Forex rebates on every trade - win or lose!

WASHINGTON (Thomson Financial) - The Federal Open Market Committee decided today to lower its target for the federal funds rate 75 basis points to 2-1/4 percent.

Recent information indicates that the outlook for economic activity has weakened further. Growth in consumer spending has slowed and labor markets have softened. Financial markets remain under considerable stress, and the tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters.

Inflation has been elevated, and some indicators of inflation expectations have risen. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization. Still, uncertainty about the inflation outlook has increased. It will be necessary to continue to monitor inflation developments carefully.

Todays policy action, combined with those taken earlier, including measures to foster market liquidity, should help to promote moderate growth over time and to mitigate the risks to economic activity. However, downside risks to growth remain. The Committee will act in a timely manner as needed to promote sustainable economic growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Gary H. Stern; and Kevin M. Warsh. Voting against was Richard W. Fisher and Charles I. Plosser, who preferred less aggressive action at this meeting.

In a related action, the Board of Governors unanimously approved a 75-basis-point decrease in the discount rate to 2-1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York and San Francisco.

Just as the Dow was hitting resistance before the announcement, so EUR/JPY (which is the one I'm trading atm) was too, from around 5pm onwards (according to a down slopey jobbie I've had in place since February's high). They're both back up there and have bounced off for now.

Edit: looks like the dollar's finally found a friend.

More than a few very recent friends but more so perhaps cable than others

Anyone know what caused that 80 pip drop in cable in a couple of minutes?

Rumours circulating among Fx dealers that a UK bank is in trouble.

Thanks. Had just gone short but missed out on covering at the peak down.

Dealers cite the recent cancellations of numerous BOE officials from scheduled appearances over the last 24 hours.

Anyone any views then on if the market is so susceptible to rumours at the moment, which unlike news are unplanned whether we should be trading at all or keeping out until things settle down.
Seems to me that I've been very fortunate entering a short and catching the right side of a rumour but it could quite easily have been the over way. More of a lottery than trading in that sort of environment. What does anyone else think?

MPC Minutes shortly, FF, which are almost certainly contributing to volatility this morning as well as the Fed being digested from last night and the troubled bank rumours.

I'd suggest that you look no further afield than the 5 or 15 minute charts for the time being. They both say down for now.

Thanks Hils,

Think the MPC minutes has potential to make a big move in cable one way or another. Even though the 5/15 mins charts say down just makes me a bit nervous and the trend could be reversed within seconds potentially so any stops easily taken out. Think I'll take half my posittion off and let the other half ride. At least that way I'll have a profit regardless.

Incidentally 8-1 is the concensus vote, but watch closely the accompanying gobbledegook for excessive talk of inflationary pressures as this would stifle expectations of the threatened further cuts this year.

I note the denial of both HBOS and BoE that emergency funds have been requested by HBOS. A contrarian investor would of course see that strong denial as proof that something is amiss, on the other hand it could be a buying opportunity. Either way it is having a serious impact on the currency markets. Analysts believe HBOS will need to raise some 100+bln later this year to cover short term maturing funds, so it could get a little sticky if the current market conditions continue.

Meanwhile real glad I am sticking to the 15/5min charts. Never mind long term positions...just grab the pips on the movements.

Johnt,

As a matter of interest when you are trading on 15/5m timeframe how do you deteremine your stops in particular when it is really volatile like now and very spikey? Do you just set it beyond previous significant high/low point or wait to reverse on an opposite signal like Hilary?

I want to start studying to trade on the lower time frames when I get chance so interested in how others do it.

Hi Foxy,

Re your request. I use trendlines across highs/lows of 60min chart + Pivots (using GMT values as have found them to be more accurate than those based on EST), this help me clearly see potential support resistance bounces. I also draw trendlines across high/lows on 15min (same reason). I have overlayed the slow Stoch on the Price chart and look for turns + oversold/overbought indications with Price Candle to tell me when to enter/leave mkt. Stops placed above last peak/trough, but generally give my little soldier some time to win the war and give it no less than 20pips.

Hope it helps.

John

Thanks for that John,

You seem to do pretty much what I do on a larger timeframe, (and I guess most others); trendlines, support/resistance, swing highs/lows but applied to the lower timeframe. I have used pivots in the past myself but dropped them but may have a look again for the shorter timeframes.

Do you have ever have a maximum stop that you will never exceed or will it always be dictated by the last peak/trough?

Hi Foxy,


I try to judge the entry position to minimize the potential loss. In fact I always calculate how much I will lose by placing the trade and until the trade is in profit, I continually run the losses through my head! it is a good discipline for me and makes sure I do not enter a 'wild emotional trade'. So placing a stop is always a personal matter but when trading the lower timeframes I believe you can maintain good discipline by keeping the Stop within 20 - 25 pips. Of course you get slippage and commission as well to contend with, but I think the best objective is to focus on what is the best trade for you. May I suggest you try out some paper trades and see how it works out for you before putting your money on the table, to coin a phrase! Today when my cable moved into profit I took some profits and moved the Stop down with the price, so it happened to work out well for me this time.

Hope it helps.


John

FF,

I actually lied to you the other day when I joked that I don't do discretion.

What I mean by that is that I don't blindly follow the direction of the 5 minute MACD and I do actually use a combination of 1, 5 and 15 minute charts.

Let's suppose hypothetically that I come to the market at 7am and both the 5 and 15 minute are going up and I want to go long. The problem is that I 've missed the best entry and their low (where I would ideally like my stop loss) is now more than 50 pips away.

I've then got 2 choices as I see it.

I can firstly sit on my hands all day waiting for a window to short it which might not come. In the meantime I could miss a rise of another 100 pips.

My second choice is to try and find an entry to go long from an even faster timeframe which can only mean the 1 minute chart. It's then just a case of waiting for the 1 minute oscillators to come back to being oversold and then start to show signs of strength before hitting the button to go long (so long as the slower timeframes are still going up!). That's called a continuation signal. With cable falling most of the day today, there have been numerous 1 minute continuation signals to go short throughout the day which have let the Yanks in as they've woken up and come to the market. With a continuation signal, you just put your initial stop loss outside the last 1 minute high or low and hope that the 5 minute trend continues.

Simple as that.

:o)

15:35. That's another 1 minute short cable continuation signal as I type.

Here's that signal in a pretty piccie in the M1 chart.

M5 and M15 both falling, overbought M1, some signs of weakness, sell at around 1.9880, cover the short if it starts to show strength before making a lower low than the previous M1 low.

Hils,

That's fantatsic. That gives me a real good insight into what your doing on the shorter time-frames. I'll study the charts and play about with some settings to see what works best and how they react in each of the timeframes.

John,

Thanks for your reply. I'm certainly going to try things out first before taking the plunge on my main account. I think I'll continue to trade my normal account using my current trading style and trade the new strategies using the minimum amount possible per pip.

I think paper/demo trading has it's limitations (certainly for me) as you don't have the pyschological involvment in a trade. At least with some even token amount at risk it will help me focus more.

I'm definately going to crack this. I can trade on the higher time frames so I'm certain I can apply my discipline to make it work on the lower ones. Anyway I like a challenge :-)