Anyone here into FOREX?

[Music_Producer]

I haven't touched AUD/JPY or GBP/JPY.. I did have a feeling that AUD/JPY would drop a bit.. to maybe 90 and then go back up. But please, don't take any of my advice You also have to take into account that oil prices have fallen big time, so the Yen benefits from that. If oil goes back to $70 a barrel the Yen will get hammered.. and you should see AUD going up to maybe 94.

Hoef, there have been times when I've bought AUD/JPY at like 86 or so.. and then it dropped to 83 in a few days.. making me go absolutely nuts. Eventually though, it went back up to 86 and I sold it off. And then it just kept going up.

Here's what I look out for.. massive drops.. and then i rush in to buy. For e.g. that GBP/JPY dropped 135 pips in 2 hours or less.. and I bought tons of GBP/JPY. If it had dropped more I would have been screwed.. but obviously it corrected.. and I made a substantial profit.. plus made interest.

Remember to offset your losses by trading the news as well. That will keep your balance +ve and at the same time you're making interest as well.

 

[~Shard~]

I haven't touched AUD/JPY or GBP/JPY.. I did have a feeling that AUD/JPY would drop a bit.. to maybe 90 and then go back up. But please, don't take any of my advice You also have to take into account that oil prices have fallen big time, so the Yen benefits from that. If oil goes back to $70 a barrel the Yen will get hammered.. and you should see AUD going up to maybe 94.

Yep, there's many factors at play. Everything affects everything else. As I stated previously, you can also use Gold as an indicator - it has a direct negative correlation with the USD. I see Gold pulling back a little from its current levels, but as long as it doesn't break support (in the low $600s) then it's off to the races! Gold broke above a triangle pattern last week, as can be seen from this chart I grabbed at the time. Next resistance is just below $680. Thereafter, resistance is $725.

Hoef, there have been times when I've bought AUD/JPY at like 86 or so.. and then it dropped to 83 in a few days.. making me go absolutely nuts. Eventually though, it went back up to 86 and I sold it off. And then it just kept going up.

Yeah, that can get quick rough on the nerves! As long as it goes back up, that's fine, but there's always the danger of getting margin called before that happens and having your account wiped out - and then some.

Here's what I look out for.. massive drops.. and then i rush in to buy. For e.g. that GBP/JPY dropped 135 pips in 2 hours or less.. and I bought tons of GBP/JPY. If it had dropped more I would have been screwed.. but obviously it corrected.. and I made a substantial profit.. plus made interest.

Remember to offset your losses by trading the news as well. That will keep your balance +ve and at the same time you're making interest as well.

Sound advice. (Hmm, pardon the pun... ) If you can capitalize on quick and significant movements, that's great, but you have to be careful because then in some cases, you're essentially "trading blind" - in other words, you're trading not based on any fundamentals, but based on what you think will happen - and always remember that no one can predict the markets. That's why trading on the news is so important - you're trading on actual facts, and yes there can be surprises from time to time, but you can never go to wrong trading in that manner, as opposed to what others would call "educated guessing".

And don't get me wrong, I trade on quick movements like that as well at times, and based on technical analysis, but I always try and look at the big picture and do not just buy and sell because I received an indicator telling me to do so.

 

[Music_Producer]

Yep Shard.. I always trade the news usually.. but when there's a big drop .. I get tempted and jump in Of course, I use a very small lot and employ a stop loss as well..so if things go the opposite way.. I am not affected much.

Thing is.. at times, you tend to get a little greedy and get tired of waiting for the news.. you're like 'Why should i make money just a few times a month? I want to make it everyday!' That's essentially a big mistake of course. Those impulsive trades that I do carry out are very rare.

Btw, on a funny note.. when I opened my account at CMC the salesperson asked me ' Who recommended CMC markets to you?" and I replied 'Oh, Shard did.. I mean.. er.. this friend on an online forum' Lol

 

[~Shard~]

Yep Shard.. I always trade the news usually.. but when there's a big drop .. I get tempted and jump in Of course, I use a very small lot and employ a stop loss as well..so if things go the opposite way.. I am not affected much.

Thing is.. at times, you tend to get a little greedy and get tired of waiting for the news.. you're like 'Why should i make money just a few times a month? I want to make it everyday!' That's essentially a big mistake of course. Those impulsive trades that I do carry out are very rare.

I know exactly what you mean. I actually gave in to those impulses yesterday myself. I was just sitting at my computer desk, doing stuff on my Mac and watching CMC on my PC. I saw that the EUR/USD was fluctuating quite a bit, so when it dropped about 4 pips in succession, I popped in with a 50,000 lot and sold it a few seconds later for a 2 pip gain. It was more of a fun trade, since I only made enough money for lunch that day, but still...

Btw, on a funny note.. when I opened my account at CMC the salesperson asked me ' Who recommended CMC markets to you?" and I replied 'Oh, Shard did.. I mean.. er.. this friend on an online forum' Lol

Haha, that is pretty funny. Hmm, wonder if they're going to try and find a "Shard" in their system now...

 

[Music_Producer]

Great trade today! Bagged 26 pips today on CMC The US reports.. well *all* of them were bad.. ppi, retail sales, ex auto, etc.. so it was a no-brainer.. bought gbp/usd rightaway.. damn thing has climbed up by 20 more pips after I got out.

 

[~Shard~]

Great trade today! Bagged 26 pips today on CMC The US reports.. well *all* of them were bad.. ppi, retail sales, ex auto, etc.. so it was a no-brainer.. bought gbp/usd rightaway.. damn thing has climbed up by 20 more pips after I got out.

Glad CMC did the trick for you again Music_Producer! Unfortunately I was a little slow this morning and my hesitation cost me several pips. Basically, I saw the news come out, saw the spike and was about to click BUY when I had that brief second of doubt that maybe I had missed the spike and "if I buy right now I'm getting in at the top of the correction", i.e. that I had missed the boat. At that point the EUR/USD had already shot up 20 pips (from 30 to 50), but I quickly acted as I knew I should and bought anyway at 53, selling at 60 for 7 pips. So, nowhere near how much I could have (should have!) made, but a gain nonetheless and another trade which I'm chocking up to experience - after all, I've only executed about 6 trades so far in my life! Hopefully my speed and confidence will increase the more I trade and in a year or so I'll be at the position you are Music_Producer. How long have you been doing this, by the way?

Anyway, what's the next trade you have your eye on? The US CPI announcement on Thursday? Expecting more of the same?

 

[~Shard~]

A question for you - what are your thoughts on hedging a trade like this morning's with 2 currency pairs? I realize the risk, but am curious if you have ever thought of doing this.

As an example. The expectation was that the US #s would probably be weaker. So, what if you bought EUR/USD before the announcement to try and capture the full gain, as much as possible, and then to hedge this, you sat with the trade window open for the GBP/USD pair and your mouse over the SELL button? If the report comes out as expected, you've gotten in before the spike and made a lot of pips, but if it goes the opposite way, you could close out your EUR/USD position immediately for a loss and also sell the GBP/USD to make some money that way (and hopefully end up ahead).

Any thoughts?

 

[~Shard~]

Gold & Oil

I'm looking at buying the December contract for Gold very soon and holding until sometime in December. I commented on this a few days ago...

Oil is looking very attractive right now as well. One model I use for commodities like this is seasonality. Of course you need to take other things into consideration, but it is a very solid model on its own.

Take a look at this chart :



As I've illustrated above, the best period of seasonal strength for crude oil is roughly from the end of November to the end of March, give or take. Crude oil has gained in five of the past five periods with an average gain per period of around 17% - pretty decent. Seasonality for crude oil prices has changed slightly over the years though - normally, ten years of data is used in seasonality studies, however an exceptional advance by the price of crude oil from around $27 USD to $80 USD during the past three years has skewed the data.

Anyway, that's seasonality. From a techncial perspective, signs of a bottom in the price of crude oil have also appeared. Crude oil is trying to bounce from its October 31st low at $57 USD per barrel. Its long term trend remains upward and long term support is at $56 USD per barrel. Resistance is at its all time high (around $79.80 USD). Short term momentum indicators (I use MACD, RSI and stochastics) have turned higher from oversold levels and as a result, the initial upside technical target during the current period of seasonal strength is $66-$70 USD per barrel. There's definitely some money to be made there!

On the fundamental side, which you always have to look at as well, a balance between supply and demand seems to be returning in my opinion. OPEC has said they will reduce production during the lower demand season between summer and winter, and as you probably heard in the news, they recently reduced production by 1.2M bpd. Oil inventories in the US have started to fall from record levels and seasonal demand in the US will increase as the winter heating season approaches. Personally, I expect demand this winter to be higher than last winter, which was the warmest winter in the past decade. maybe this winter will surpass it, but I have my doubts.

Meanwhile, rising demand for oil by nations such as China and India appears to be having an impact. From the latest reports I've read, China is planning to start filling its long term storage facility in 2007. And as always, geopolitical events also will continue to influence prices and I don't see those going away anytime soon.

Anyway, just some info for anyone who's interested. I'm by no means a Forex expert yet like Music_Producer, so I thought I might as well contribute in my own way.

 

[Music_Producer]

Hey Shard, you had a good trade too! Even a 1 pip profit is excellent.. remember, it's the total pips we make that counts. If you made a pip a day and that 1 pip was $100.. that's $3000 a month. Obviously we make more (and could lose too) pips than that.

Hedging.. well no one would be fast enough to close one position and open another.. within half a second! What you could do is.. open the eur/usd .. say 'buy' and employ a stop loss of 10 pips. And sell gbp/usd at the same time and employ the same stop loss.

So if the usd goes up.. and eur/usd moves down.. it will hit the stop loss and close.. while the gbp/usd you can sell for whatever profit. I don't like doing this though.. because of all the whipsaws that take place before any report. I've tried it on demo accounts and while some trades have been fantastic.. majority of them hit the stop losses before the reports.. and then what if the report is as expected.. so the currency doesn't move much? You'll hit a stop loss of 10 pips on one pair.. and make a profit of 5 pips on the other.. still netting a loss. But it's definitely worth a try.. do it on your demo account first of course.. and see if you are comfortable with that strategy.

Damn, oil was $20 a barrel? Man these OPEC people are so greedy.. but yeah, you are right about energy costs rising during the winter.. well look at all our heating bills and all that as well. 17% a year is very attractive indeed. Somehow I can't find oil and metals and stuff in my cmc account.. perhaps US residents can't trade that or i'm just a dimwit. Ahh i'll look for it later.

For tomorrow, its the Empire Manufacturing Index.. that should be an important report (if it deviates) I like trading the GBP during the UK repors (usually at 4.30 am EST) because the GBP/USD almost always moves everytime.

Oops to answer your other question.. I have been doing this news strategy since the last 4-5 months. The first few months that i did forex (in 2005) I lost all my money because i used to trade on gut feeling and charts.. kinda like trading blindly! Lost $3000 and was so pissed off that i gave up.. but came back and recovered all my money and more

 

[~Shard~]

Hey Shard, you had a good trade too! Even a 1 pip profit is excellent.. remember, it's the total pips we make that counts. If you made a pip a day and that 1 pip was $100.. that's $3000 a month. Obviously we make more (and could lose too) pips than that.

Yep, I'm definitely not complaining. After all, you can't get greedy, or else, well, bad things happen.

Hedging.. well no one would be fast enough to close one position and open another.. within half a second! What you could do is.. open the eur/usd .. say 'buy' and employ a stop loss of 10 pips. And sell gbp/usd at the same time and employ the same stop loss.

Yeah, it was just a thought. As you say, I might try it on my demo account and see.

Damn, oil was $20 a barrel? Man these OPEC people are so greedy.. but yeah, you are right about energy costs rising during the winter.. well look at all our heating bills and all that as well. 17% a year is very attractive indeed. Somehow I can't find oil and metals and stuff in my cmc account.. perhaps US residents can't trade that or i'm just a dimwit. Ahh i'll look for it later.

I don't know why they would limit it for US residents. For me at least, if you go to "Instruments" there should be 2 main trees you can drill down into - "CFD" and "Foreign Exchange". Under "CFD" there should be CFDs for multiple countries (Asia, Canada, Europe, Scandinavia, UK, US) and also one called "CFD - Commodities". Under this one you can find the monthly contracts for Oil, Energy, Metals, you name it. In the case of Oil check out the December contract, as the November contract expires in a couple days.

I believe the outright spot prices for Gold and Silver (not sure about anything else) are in the "Foreign Exchange" section though. Basically, you're trading XAU (Gold) or XAG (Silver) against the USD, just like a currency pair (except one is a commodity). There is no expiry on spot contracts of course.

For tomorrow, its the Empire Manufacturing Index.. that should be an important report (if it deviates) I like trading the GBP during the UK repors (usually at 4.30 am EST) because the GBP/USD almost always moves everytime.

Cool, I'll try and be around for this trade and will try my hand at GBP/USD this time since I've done EUR/USD the past couple of times.

Also, OPEC's announcement is tomorrow so I'll be listening into that one as well. Unfortunately I'll be at work for it, so I won't be able to act on anything, but after the announcement is made I'll feel confident in acting on Oil one way or the other.

Oops to answer your other question.. I have been doing this news strategy since the last 4-5 months. The first few months that i did forex (in 2005) I lost all my money because i used to trade on gut feeling and charts.. kinda like trading blindly! Lost $3000 and was so pissed off that i gave up.. but came back and recovered all my money and more

Wow, I must say I'm surprised! With your knowledge and experience on the subject you come across as an "old pro" and I would have thought you had been doing this along time! I'm glad you've been able to pick it up so quickly and have such great success with it. It also gives me confidence that the learning curve isn't necessarily steep and I might be trading at your level sooner rather than later myself. That's great for you Music_Producer.

So, when are we starting our own hedge fund?

 

[Music_Producer]

Shard, don't trade the GBP/USD today.. or use caution.. the GBP/USD has dropped by more than a hundred pips so far.. on bad claimant count and inflation reports.. I traded it for 20 pips on cmc.. and then exited.. thinking it would stall.. but it just kept dropping.

Another news report coming out at the same time (5.30 am EST) is the canadian manufacturing shipments report.. so i see that clashing with the us empire manufacturing index. I won't be trading this one - simply because there are 2 reports.. hey when we form a fund maybe you can trade one pair and myself the other

I'm still itching to trade today.. i'll probably trade the eur/usd on the us report.. but something tells me to trade the usd/cad instead. Ahhhh ..what to do !

 

[~Shard~]

Thanks for the head's up! I'll watch the trade with caution and instead focus on the EUR/USD or USD?CAD pairs... I won't force a trade if it isn't there of course.

 

[Music_Producer]

Hey! What are you doing up so early?

Just read that an 8.1 earthquake struck japan.. don't think it will affect markets though.

Edit - never mind, struck north of japan.. not major cities.

 

[Music_Producer]

Wait.. 8.1?!! That's HUGE!

 

[Music_Producer]

7 pips on the eur/usd (us empire survey) .. how did you do on the usd/cad? Hope it moved a bit!

 

[~Shard~]

Yeah, I heard the tsunami news as well but it doesn't seem to have affected things too much - at least it hadn't this morning from what I could tell.

As for the trade I didn't want to chance it so I didn't pull the pin. The Oanda news service didn't report the numbers right away, so basically I saw the EUR/USD tank and assumed the US #s were good. But I also didn't know how the CAD #s came out, so was hesitant to trade USD/CAD in case the news conflicted. Afterwards I see that I still could have made some pips on either trade even after the initial spikes but, well, hindsight is always 20/20. Plus, then I would have been trading on aftershocks (an appropriate term for this morning I think! ) not the news itself.

So no trade for me this morning but I will be keeping my eye on the OPEC and FOMC announcements today and will be set to trade US CPI tomorrrow morning. That's the nice thing with forex trading - there's always another trade to be made and you know when it's going to happen.

 

[Music_Producer]

Yeah, the US report came out much, much better than expected.. so regardless of what the CAD reports were.. the USD would have hammered it anyway, since there was broad based US$ buying. I kept switching between USD/CAD and EUR/USD every few seconds.. lol.. as I couldn't decide what to trade.

Tomorrow's core CPI report is important.. but if it comes out as expected, then the unemployment claims become significant.. in other words.. if there is a big deviation in the unemp claims.. that will move the markets.

I'm looking forward to trading the GBP/USD on the UK retail sales report tomorrow. What I have noticed about the GBP/USD is.. that if a report is good/bad.. the GBP/USD moves in one direction.. and keeps going that way until the US session opens. So when i got out last night for 20 pips on the UK trade.. I could have stayed in the trade and grabbed 150 pips. This is, of course, what I have noticed so far.. things could always change.

 

[~Shard~]

Yep, I'll be watching the CPI and unemployment #s as well. As for the UK retail #s, I didn't have that one on my radar screen, so thanks for the head's up. Depending what time it is for me, I'll see if I'll be available to trade it or not. If not, then bag a couple pips for me!

 

[Hoef]

Music_producer & ~Shard~ .... What is your take on CMC after using it for a while with the use of oanda news, and / or multiple other screens? I like the idea of potentially trading other commodities.

 

[Music_Producer]

CMC is very good when it comes to spreads, and their execution. I don't like their ordering system though.. when you hit buy or sell.. you then have to click 'new' and then close the position. It should be a one-click procedure. Also, on their website it states that you can get multiple logins for one account (so i can have 2 screens open.. and hit buy/sell without hitting 'new') But when i emailed them, i got a flat out 'sorry, we cannot offer multiple logins unless there are exceptional circumstances'! Whatever! So I still make profits on CMC, but it could be better..secounds count in forex.

so I still like oanda's trading procedure.. but i love cmc's spreads.. ahhh.. man.. all Cmc have to do is make everything simplified.. or allow 2 logins per account and I would leave Oanda rightaway. Oh, for carry trades, oanda is the best

Additionally, Hoef, I hope your AUD/JPY is not in a loss anymore.. its steadily come up now.. its at 90.45 right now.. I don't know what levels you bought it at but hopefully you can close the position for a profit (or break even) and you'll have earned interest.

 

[Music_Producer]

Grabbed 12 pips on the UK retail sales report, and 7 pips on the US CPI report.. CMC hiccuped a bit during the US report.. and i had to click twice.. so lost quite a few pips.. but good profit nonetheless.

US cpi came out worse than expected. Anyway, more data coming in in half an hour

 

[~Shard~]

Grabbed 10 pips this morning - very happy with myself! I still don't have quite the dexterity you must have though Music_Producer - I'm trying to act as fast as I possibly can, yet still always seem to miss the majority of the initial spike. Ah well, all in good time...

So further to this, do you always wait until the news actually comes out, or if it lags the spike by even a little bit, do you ever just trade on the spike, assuming what the news was? It seems like if I wait for the news flashes, then by the time it takes me to digest them and execute a trade, it's almost too late.

Did you trade the UK Retail #s this morning? It was at 3:30 AM for me, so this time I chose sleep over trading - maybe next time...

And I agree with you about CMC - good in many respects, but could be improved. Oanda has many advantages over it, so for me at least, I will continue to use both for my trading needs.

Music_Producer, did you find the Commodities section in your platform?

 

[Music_Producer]

Hey Shard, I think I am quicker because I trade as soon as I hear the news.. maybe you trade on the spike. Also, CMC does not execute rightaway.. remember on Oanda how I used to get in before the spike? It doesn't happen with CMC.. there's a lag of 2, sometimes - 3 seconds.. and then my order gets executed. Then i click 'new' and exit the trade.. but I do lose quite a number of pips this way.

Also, I think I am right - CMC doesn't let US residents trade with other commodities.. I simply cannot find oil, etc. I remember signing up with Saxo .. and they had a little notice where it stated that I couldn't trade commodities. I am sure CMC allows trading gold and silver though.

 

[~Shard~]

Hey Shard, I think I am quicker because I trade as soon as I hear the news.. maybe you trade on the spike.

Do you use the Oanda news service then, or one that is faster? I'll pay more attention during my next trade, but with Oanda's service at least it seems as though the news happens either simultaneously with the resultant spike or even a fraction of a second afterwards. <shrug>

Also, CMC does not execute rightaway.. remember on Oanda how I used to get in before the spike? It doesn't happen with CMC.. there's a lag of 2, sometimes - 3 seconds.. and then my order gets executed. Then i click 'new' and exit the trade.. but I do lose quite a number of pips this way.

Yeah, I have noticed that too. It executes quickly, but not instantaneously, and then of course it takes a second or so to come up with the "new" option so that you can close the trade out. Ah well, the fixed spreads are still nice....

Also, I think I am right - CMC doesn't let US residents trade with other commodities.. I simply cannot find oil, etc. I remember signing up with Saxo .. and they had a little notice where it stated that I couldn't trade commodities. I am sure CMC allows trading gold and silver though.

Interesting, I wonder why that is? Ah well, what can ya do I guess...

So are you going to be trading the US housing starts and building permits tomorrow? I'll be watching for sure to see if there is a trade or not to be made.

 

[Hoef]

Additionally, Hoef, I hope your AUD/JPY is not in a loss anymore.. its steadily come up now.. its at 90.45 right now.. I don't know what levels you bought it at but hopefully you can close the position for a profit (or break even) and you'll have earned interest.

Yeah it has come back ... but all in all I took a 20 pips loss. Recovering slightly couple of pips at a time (made only 3 today on the CPI but happy anyway). Your account and how you lost big time in the beginning was quite motivating. Thanks for sharing!