Don't Hang Out For The Big Trades And Pick Up The Little Cherries

A man may ride a donkey but at least the donkey is heading in a direction!


If you're a day trader do not hang out for the big waves. You do not need to wait for key announcements that can take you 150 pips up or minus 150 pips if you get it wrong. Tsunami trading can hurt you. 

The pairs that I monitor every day are - 

EUR/USD
GBP/USD
USD/JPY
EUR/JPY
CHF/JPY
GBP/JPY
USD/CHF
EUR/GPP

and crude oil 

Capture 20 pips  on 15 min charts for 3 candles after a signal or 45 mins and multiply that by 5/8 and youre likely to gain 100 pips versus 3 wrong trades of - 10 pips x 3 or - 30 pips.

Therefore net 70 pips can be booked regularly daily without even having to face a 50/50 prospect of a windfall or a wipe-out on a market data release.

Trade modestly as a day trader and you can pick up these cherries regularly as you see the patterns repeat over and over again.

Trade small and accumulate in the long run.

Happy trading!

Typical Tokyo Morning

Even at a pre-Christmas week with thinning volatility the following shapes and patterns are typical of a Tokyo morning.

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 !

Narrow Range 4 Inside Bar (NR4/IB) Trade Set Up

Apart from the Bullish and Bearish Engulfing patterns on 15 min charts one of the most exciting prospects is the NR4/IB where the market stalls like a motor car engine and just needs to kick-start from a state of entropy to hyper-inflation. Big Bang moment.

Spot the NR4/IB on today's 15 min CHF/ JPY. The trade setup came in prior to Tokyo open.
many Tokyo traders just love to get in there early and take advantage of directionless trading hoping to catch a big wave on Tokyo open.

The criteria for NR4 is that the preceding 4 candle bodies must be of same size or narrower and then the 4th or 5th body must become an inside bar and usually the color of the last body is an indicator of which way the market will surge.

Remember to trade 15 min charts within context of day charts and in particular the 50 and 200 day moving average.

Keep your eyes peeled.

3 charts on the GBP/JPY and how to trade Asia Euro time zones effectively

In the long run we seek rational order and balance; the sheer chaos of conflicting ideas makes us giddy and we grope for some sane anchor to pin down our belief systems and shape our confidence.

Now turning our attention to the Forex markets even a day in the global calendar can seem a lifetime and so when we search for rationality we more or less attempt to frame the day's trading activity against the yearly price range and the 200 day moving average to understand what is going on in the 24 hours we roil and seethe with intense emotion in taking positions.

If we break down the FX clock starting from Japan and Asia we have three major segments starting with Japan then moving across to Europe for the second session and then on to New York for the US session. The bulk of the day trading is completed during Asian and Europe sessions.

Let's take a look at three charts marking the progress of the currency pair GBP/JPY from the morning Asian session to Europe session. The three charts comprise Japanese time 11am - 15.00 am 17.00 for Friday 11th December..

Chart 1 - 15 minute chart

As can be expected Japan overnight was fast asleep but come 6am Japanese traders start entering the market and volatility starts to explode and momentum takes a direction. Entering a trade on Japan open is highly desirable as the session is packed full of action towards it's tail end where it will overlap withe the main market Europe. China HK and Korea adds to the growing regional FX position and liquidity.

Japan session is a good window opportunity to tak a position for any key Europe an US data release if you are a swing trader looking to capitalize on a news release.

Now let's follow to 15.00 hrs the same day yesterday.

Chart 2

Come 15.00 hrs yesterday you will notice a lot of action has happened and we are now entering into a lull in the market which I call the dead zone where it would be unwise to stake a new position. The ideal long trade would have exited around 15.00 hrs prior to Europe open.

So what happens next?

Chart 3

On Europe open the market jolts up with a large green body and larger candle bodies follow to indicate a huge battle of red and green. there is a 45 mins tussle going on where huge money is pouring in to take positions. The Hanging man on the 15 mins chart preceded by a large red body is the straw that breaks the camels back and the market plunges. Traders would have come in with big shorts on the 14th minute on the large red candle following the green hanging man. Two large red bodies follow as price collapses in 30 minutes. But then the small red body over a large line is a serious warning that the market has run out of sellers. The large green body over the next 15 minutes would have seen big longs come into the market. Thus the first two hours of the Europe open presents two brilliant trading opportunities.

The currency markets tend to follow this similar pattern all year round and hence we can understand a rational structure of thin and larger volatility across the two time zones. Work with that volatility in the short term. Feel it's pulse.

As a rule I do not think it's a good idea to take large positions into the US session and try to exit after a key report by 10 am EST. Why? Pigs get slaughtered and the US session has thinner liquidity and you can become stuck into a huge dead zone of directionless trading as you drift towards Japan open. If you want to hang out for the big trade in excess of 100 pips in a day session you are going to get slaughtered. Taking 20 pips here and there over select currency pairs over the Asia and Europe time zone gives you better chance of a 6-4 win ratio. I try to focus 90% my trades during Asia and Europe session.

Always remember past performances are not indicative of future results and 90% of traders do lose because they always read into the markets what is in actuality not there.

Stay well friends

Trading 5 and 15 Minute Charts From Inertia To Breakout

Ok, so now here are 2 charts today where we can witness how all things eventually change in time. While many times during the day traders wait for some new data and news to give them a new sense of direction and purpose, there will be always the opportunity for a trade when momentum suddenly builds upwards or downwards.

In the day short term traders can scalp by buying and selling within the framework of a minute. For example the 'buy' on the EUR/USD maybe 1.0635 and the 'sell' 1.0632. The spread would be 3 pips and usually within the space of under 1 minute the price may change  to 'buy' 1.0643 and the 'sell' 1.0640. Now if you have bought 1 unit EUR/USD at 1.0635 and if you had sold at 1.0640 in under a minute you may have made 5 pips on the trade. Scalpers thrive on momentum and weigh probabilities of a downward drive or upwards climb scalping all the way every 1 minute. Looking at the 15 minute charts scalpers pretty much understand that a decent run could last up to an hour before it fizzles out. Using these techniques many teen phenomena have emerged the last couple of years and making huge amounts of money in the process.

Lets start with the 5 min chart first.

On the EUR/ USD notice the last 2 red bars. That's 10 minutes where prices dropped from 1.0632 to 1.0625 which is a 5 pip range. Once momentum moves a scalper will sell and buy to close and then sell and buy to close inspecting the rate of change between the last candle and the preceding 5-10 candles on the 5 minute charts. Increases in the rate of change convinces the scalper to pile in and in some cases add more units on the scalp trade by scaling up to exploit profits on the window of momentum.

Lets start at the beginning and look at the 15 minute chart to see how the market developed today 8 hours ago.

As we can see 8 hours ago the market flatlined in a tight range. Notice that the flatline followed an explosive climb with an upwards bias. But all things run out of steam and so commonly the trajectory started to drift.

Now lets look the last 2 hours at the 15 minute chart to see what followed after the flatline.

Now notice that the flatline that followed after an explosive surge then resumed its course upwards over a 2 hr period. the market climbed from 1.06070 to 1.0655 in a massive momentum push.

So the lesson learnt is that with patience if you follow the flatline on inertia, a direction will eventually ensue to the up or downside and then you can capitalize on either by scalping every 1-2 minutes or by trading 5 minute or 15 minute candles.

It often pays to watch with keenness any lull and inertia because a market breakout becomes the essence of an intra-day swing trade. A good FX trader can keenly watch 5-6 strongly liquid majors during the Euro session and pile in trades with regimental stop-losses in place and often conclude a 6-4 winning ratio. Add the pips up in a day and that's significant. Therein lies the basis for many teen phenomena trading today. They simply have the stamina to rake in the trades with a brutal discipline to cut their losses and not think about it.

Most profitable hours for day trading forex

FX trading can be highly profitable for the disciplined mind whether as a day trading vocation or swing trading position taking over several days.

The most Profitable Hours for FX trading are the Euro session prior to New York cut. In these hours are the greatest depth and liquidity and volatility. You cannot make a profit if a price doesn't move. Usually key US economic announcements start early morning US session and at the back end of the Euro session. All the jockeying for positions takes place prior to a key US announcement. So if you are going to trade forex I would suggest to track the Euro session to the US session opening 1hr. If you track the session volatility for about a month it will become evident that price movements occur rapidly nd therefore you can make money on a good trade. Outside these hours the forex markets tend to drift as the buzz and excitement dies away.

The key to a good trader is consistency. When things go wrong do not waver. Apply your formula for success and markets will change direction as surely as the wind does.When there is volatility the markets can change on a dime so you are not always going to carry a good trade. But with consistent application in the long run you will have more good trades than bad.

Flash crash trade Pound/ Sterling

Flash Trading

Yes I'm a trader by background but after I saw Pound/ Dollar crash 6% in 2 mins in Asian session i need to point out the dangers of day trading.  Computer program trading is becoming more and more autonomous and self-determining and what started as a push became a cascading tsunami and more and more computer sell orders got triggered yesterday on the Pound. Mathematically computers are sifting through key words in news statements and quantifying those words as probabilities and exponential equations. Day trading has got a whole lot harder now because of the automated trading world and i recommend swing trading over 2-3 days using Japanese candlestick day charts is a safer analysis of momentum.