Big Moves – April 23 Forex Trades

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Big Moves – April 23 Forex Trades

April 23 started with big moves in the AUD forex pairs, following CPI numbers. The action continued following GBP Bank of England Minutes several hours later.

AUDUSD Trades

If you were quick you could have gotten in on the short right after the news announcement (4:30 on chart below). Typically I don’t trade right at news though, so I had to let this one pass by.

The next opportunity came on a pullback. After such a strong sell-off I wasn’t looking for anything fancy, just an excuse to get short and hopefully capitalize on a further decline. I drew a trendline on the pullback and when the price broke below it, I took my short. I placed a stop above the recent high and put a target at roughly 1.6 times my risk. The target was hit about 50 minutes later.

The second trade was a similar set-up– taking a short as the price broke below an upward sloping trendline on a weak pullback. This trade took more than a couple hours and barely budged. I eventually got out of the trade for a small profit after it paused above a prior low, indicating much of the downside momentum was gone.

Figure 1 shows the trades, with the arrows marking the trades and direction and the “thumbs up” marking the exits.

Figure 1. AUDUSD Trades – 5 Minute Chart (prior to London Session)

The next trades came as the London session was beginning.

USDJPY

This pair had been pretty sedate over the last few days, and had put in a lower swing low and a lower swing high over the last day and a half. After a very small pullback I initiated a short trade when a red bar engulfed the prior green bar. A stop was placed just above the recent engulfing bar and a target set at approximately 2.3 times my risk. I choose a larger target for this trade simply because I was expecting an increase in volatility relative to the very sedate conditions over the prior few days.

Figure 2. USDJPY Trade – Hourly Chart

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The arrow marks the direction and time of my trade (when the red candle crossed below the prior green candle). A stop was placed just above the recent high and the thumbs up marks the target price.

EURJPY

The EURJPY had a similar setup to the USDJPY trade. There was a sharp pop higher though which quickly reversed, so I assumed the price would continue lower. There was one more whipsaw move though which stopped me out

Figure 3. EURJPY – 30 Minute Chart

GBPUSD and GBPJPY

While there were some GBP trades I wanted to get into, the setups I saw (similar to the AUDUSD trade) formed very close to a big news announcement. I don’t take trades right before a news announcement, since it becomes an almost random on whether the stop or target will fill first. So I left it at that.

Final Word

The EURJPY trade was a bit impulsive, and it resulted in the loss. On the other trades I waited for a pullback and move back in the trending direction. On the EURJPY I just jumped in and left myself vulnerable. Most importantly, that type of trade isn’t part of my trading plan, so it was an error resulting from a momentary lack of discipline. Luckily the damage the small, and with the other trades the day is still profitable. Overall there was some good movement, and it is continuing in the US session.

The Art of Entering a Trade

Whether you’re a seasoned trader or new to the forex market, it’s important to execute your trades at the right time.

Here are a few things you need to consider before placing your trade.

Choose an instrument to trade

Choosing the right currency, stock, metal or other asset is the first step in entering a successful trade.

Things to consider:

  • What assets have seen big moves up or down recently?
  • Have recent big moves been against the longer-term trend or in the same direction as the trend?
  • What’s making headlines on financial and trading news websites?

These questions and your research should help you spot which assets are presenting the right opportunities for a trade.

Choose your entry point

Picking the right time to buy or sell an asset is critical to the success of your trade.

Let’s imagine you receive an alert that the price of gold is falling sharply.

It may be a good time to enter a sell trade on gold to ride the emerging trend.

However, if you’re late entering your sell position, you may find that the price of gold has “bottomed out”. This would be a bad time to enter a sell trade, but may be a good time to enter a buy trade as the price recovers.

Enter Stop Loss and Take Profit Rates

Use technical analysis to determine what a good stop loss and take profit would be.

Usually, this would be within a range that the price has tended to reverse or slow down in the past.

For example, looking at an hourly chart for EURUSD, you may see that the price has been failing to break through the 1.10900 barrier for a few weeks. You may choose to set your take profit at around this rate to secure earnings before the price hits this range and begins a reversal.

Stop loss and take profit rates will also be determined by your risk appetite and profit targets.

By keeping informed of the forex calendar and reading the news to see if the market sentiment is changing, and with enough time and experience, you’ll learn to identify which reports are simply noise and which ones you need to consider to adjust your trades.

And if you follow these simple rules, you’ll master the art of entering a trade before you know it.

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Day Trading Forex Live – Advanced Forex Bank Trading Strategies

Forex Bank Trading Strategy Revealed – Learn to Track the Smart Money!

Forex Bank Trading Strategy Explained (Updated 2020)

Questions we will answer:

Who is Smart Money?

What is the Forex Bank Trading Strategy?

Why is tracking Smart Money critical to successful traders?

Step 1: Accumulation

Step 2: Manipulation

Step 3: Market Trend/Distribution

Who Is Smart Money?

Throughout this article, you will read the term ‘smart money.’

I use this term to define the largest market participants; those who move massive volume so large that their position cannot be opened and closed in a single order without spiking the market.

This includes the largest banks, prop firms, massive global companies, insurance companies, Hedge Funds, as well as speculative traders in every variety from around the globe.

It is important to understand that although the banks might control the majority of the daily volume (refer to the chart above), the VAST majority of that volume is those banks acting as a market maker for the other types of traders mentioned above.

Yes, the top 10 banks illustrated in the chart above do take speculative positions, but the vast majority of the volume is simply market making activity, not speculation.

This is critical information, as it tells us 1 very important clue. If banks are primarily market makers then they will by default drive the market to and from areas of supply and demand which is the foundation in how we track them.

What is the forex bank trading strategy?

Definition: The Forex Bank Trading Strategy is designed to identify where the largest market participants are likely to enter or exit their position based on areas of supply and demand.

We term these levels as ‘manipulation points’.

As you can see in the illustration above, the top 10 banks control well over 60% of the daily forex market volume. Because of this, when they move in and out of the market, the market moves!

The chart above is of the EUR/USD, and it illustrates the bank trading strategy in action, live.

The trade shown was taken on November 29th, 2020 with the manipulation point (step 2 described below) having been selected 72 hours in advance in the daily market preview video (as part of the lifetime membership we do a daily market preview video each night, which shows the exact levels I’m looking to trade the following day) as you can see in the picture below.

This article will walk you through the basic outline of the 3 step process behind the forex bank trading strategy.

3 Steps to Success

In any market, there must be a counterpart to every transaction. If you are looking to buy the market someone must be willing to sell to you. Conversely, if you are looking to sell then someone needs to be willing to buy your current position from you.

As an example, if Bank XYZ desires to buy a large position in the EUR/USD, using the principal discussed above they must find an equal amount of selling pressure.

As their positions are so large, they are always entered over time so as to not reveal their hand. This leads us to the first step in the process, accumulation of a position.

Step #1 – Accumulation

Accumulation: Unlike you and I, because of the massive volume banks control they must enter positions over time that often show visibly as range-bound or sideways price action.

We call this accumulation as they are areas where smart money frequently enters or ‘accumulates’ their desired position over multiple hours or longer.

As their primary function is making the market, they make money by accumulating a long position that is later sold off at a higher price or accumulating a short position they will later cover or buy back at a lower price.

What comes after this period of accumulation?

Step #2 – Manipulation

Manipulation: Over the last decade of educating traders I’ve heard many forex traders say that it feels as if they are entering the market at exactly the wrong time.

Many traders feel as if the market is just waiting for them to enter before it instantly turns the opposite direction. Not only is that true, but this crucial step we term as ‘market manipulation’ is critical to tracking banking activity in the forex market.

The first point I want to mention is that we use the term ‘market manipulation’ but you could just as accurately describe it as a searching for liquidity, a trapping move, stop hunt, etc.

Regardless of the cause, the manipulation or ‘false push’ that comes at the end of the accumulation phase, is the most important factor in tracking smart money.

Bearish: A stop run or false push beyond the high of an accumulation period likely means that smart money has been SELLING into the market, and a short-term trend in that direction is likely to start.

Bullish: A stop run or false push beyond the low of an accumulation period likely means that smart money has been BUYING into the market, and a short-term trend in that direction is likely to start.

This point, both bullish and bearish is illustrated in the second picture above. As you can see the manipulation comes after the accumulation, and it often occurs right before step #3 begins, the market trend.

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