Trading week is over and let us look at price action in currency markets today. It was a big day, for the data of Non Farm Payrolls came out today. You have to mark this event on your calendar and always be ready to take advantage of the data as well as be careful trading it. I remember my early days in trading forex market. I started by trading news, but as I did not know much about trading and managing capital I had to go through a lot of bitter experience. I very clearly remember myself trading my first Non Farm Payrolls event having just a few weeks of experience on a mini account with Refco broker (bankrupt now).
You must have noticed that occasionally market starts moving one direction before the news and when it comes out it jumps into the opposite direction. That�s what happened with me that day. My sell order was opened and after about 10 seconds the market exploded upwards. Platform was not able to close the short order and I was sitting there desperately trying to close it manually. Fortunately, I was able to finish the day at breakeven by closing the sell order and opening a long one. This also taught me a lot about risk and capital management. If you want to trade the news you will have to be ready for a lot of problematic situations that might happen when news is released. I will talk about them some time in the future when I write a separate post about news trading.
I would say that if you a news trader today was a turbulent day for you. It does not mean you couldn�t have made any money, but you would have probably experienced a �whipsaw�. If you opened 1 minute chart you would see how the price in eur/usd, gbp/usd and other similar pairs jumped up (meaning your long order would have been opened), then after two minutes the prices started going down and reached the other end of the range and below it (meaning your short order would have been opened). Then the price again reversed and went upwards. Well, if you traded gbp/usd you might have probably avoided this, but eur/usd would have done you just that (two orders opened and then closed). I view it as a pure manipulation done by �big dogs�.
Anyway, if you do trade news you have to play under conditions that you have and one of the ways to play this situation is to put buy and sell stop order again (after the first ones are closed by market). So, let's say you traded eur/usd. Your long order was opened and after a few minutes stop hit. Then your short order was opened and after a few minutes the stop for the order was also hit. What do you do? You again place long stop order above the most recent high and sell stop below the most recent low. This kind of behavior would have put your trading today on breakeven. I cannot show you the charts yet (problems with computer) but you would have placed your second set of orders in this way: eur/usd (buy stop order at 1.4535 and sell stop order at 1.4445). Your long order would have been opened and you would have probably closed at a round number of 1.4600 (a few pips below that). That would have left you at breakeven. I hope you had some profit today though.
That much for today, I am going to write on some technical aspect of trading tomorrow. I hope I will be able to include some charts tomorrow. See you.
Read my previous post:
Disclaimer
Trading financial markets carries a high level of risk, and may not be suitable for all investors. All information on the blog is of educational nature and cannot be considered as advice, recommendation or signals to trade in any financial markets.
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