Forex rebates on every trade - win or lose!

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 :-)

From today's Torygraph:

Investors scrambled to liquidate risky positions across the board last night in a renewed flight to safety, setting off a biggest one-day fall in gold for a quarter of a century and a slide in currencies and stock markets...........

The move by hedge funds and banks to unwind large speculative trade even triggered a correction in the euro. The currency fell to $1.5580 against the dollar as speculators closed bets after a dizzying rally to record highs this year. The fall in sterling was even more marked, losing almost four cents to slump below $2 to $1.986.
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It also dropped to a new 11-year low on its trade-weighted index, which measures its strength against a basket of other currencies, falling from 94.2 to 93.1 points. Investors were abandoning sterling amid growing suspicions that the Bank of England is gearing up for another cut in interest rates next month.

"Investors scrambled to liquidate risky positions across the board last night in a renewed flight to safety, setting off a biggest one-day fall in gold for a quarter of a century"

...


so, why does a flight to safety result in a fall in gold - I would have expected the opposite ?

I think it's the fact that a lot of margined positions (including being long on gold) had to be closed out - typical journos - don't understand their subject!!

Morning. Hotei - presumably they have to sell gold to cover positions or meet higher margin requirements.

Morning all,

I'm long GBP/JPY and USD/CHF. Out most of today so I'll just leave my stops and limits in place and see where I end up later.

Hils,

If you don't mind me asking, on the M1 cable chart you posted yesterday what are the pink and blue arrows? There seems to be 2 sorts - bold thick ones and thin ones. Are they all manually added by you or drawn by an indicator automatically?

They're generated automatically when 2 ma's crossover, FF. The hollow ones are a pair of very fast ma's, the solid thin ones represent medium speed ma's and the thick solid ones represent a slower speed, more significant crossover.

I've set it up so that a text box pops up on my screen and it makes a "Ding, dong, Avon calling" sound when the slower ones crossover.

Mine pops an Ann Summers invitation through the door.