The one thing a spot trader cannot do is trade if prices are going nowhere. great news if you're an options seller but most readers are not as sophisticated in putting $10,000 Dollars capital as a tie-in keeping in ind that you should never ever ever expose more than 5% your total capital on any one single trade.
So the greatest way to catch a move is to watch Tokyo open because by the time the FX markets drift into the California West Coast zone everyone just wants to switch off.
So here goes a typical Tokyo morning where sharp traders can each 20-30 pips each time. Not a lot you may think but hang on and hold that thought. Day in, day out capture these little 20-30 pip moves and they all stack u[ into a tidy pile which will then help you to escalate your trading scale. So take note of the little things in the FX markets if you want to succeed.
Little makes BIG.
Here's 3 - 15 minute charts:
EUR/ USD crashing through the 1.05 last night on close of US session as US traders throw in the towel. Two Bearish Engulfing red candles hammered the faintest revival earlier in New York. Then typically the market goes to sleep and drifts aimlessly in a tight range. Prior to Tokyo open the early Japan traders attempt a Fibonacci retracement as a typical reaction to the previous US session. After a good 4 hours of quiet the market has to take direction and 20-30 pips are instantly captured.
GBP/USD once again a Bearish Engulfing candle set up a wave of destruction as the shorts carried the close of US session. The market drifted and narrowed. Then Big Bang. After entropy comes movement and the currency pair is hoisted in early Tokyo session and another good 20-30 pips are captured.
USD/JPY fails to inspire on market open just to go to show also that sometimes the lack of direction can drift through Tokyo morning although at the time of writing volatility is starting to increase in range though no clear cut signal has shown itself to enter a trade.
On the whole of 6-8 currency pair majors you can expect 5/8 to take a direction after a lack of direction prior to Tokyo open.
The chart repetition occurs over and over again. Recognizing the chart patterns could mean he difference between success and failure. there is a time to trade and a time not to trade. wait for the window to open.
Trading Tokyo open is far more profitable than trading Europe open because Europe follows on huge activity of Asia and more uncertainty creeps in but Tokyo awakens to a few hours of drifting quiet. Europe follows Asia's market noise. There is very little noise at US close. Therefore quiet and stillness is surely to be followed by noise on Tokyo open. The logic prevails. You trade the noise, you avoid the quiet.
Know your Mado.
Happy Trading !
