THE “AT WORK” TECHNIQUE
Someone once commented that this strategy is great if you can
be in front of your computer, but hard to do if you have to be at
work at the optimum time to do the trade, or driving to work, or
have to be elsewhere. Here is a suggested approach if you are in
such a situation. Please understand that I don’t normally do this
myself, however from looking at such trading times it appears to
work about as well.
It is very important for this that you have a digital wristwatch that
is VERY accurately set with the correct time. Use an internet
world time server to synchronize your computer’s clock, and then
carefully synchronize your watch with that (if you use a more
recent version of Microsoft Windows – otherwise find another way
to get accurate time, or better yet sync the time against your
chart’s time.). Though please remember that when you are in
front of your computer trading pay attention to the times displayed
on your charts, not your watch.
Plan to have a break from whatever you are doing starting at five
minutes before the announcement time. If you are at work go for
a washroom break or a smoke break (if you are a smoker). If you
are driving then pull over, or stop whatever you are doing. You
may want to program your wristwatch’s alarm to go off at that time
to remind you (it really sucks when you miss a great trade by
simply forgetting).
Simply call your broker’s order desk (toll-free) to have an order
placed for you. Make sure you know broker phone etiquette when
you call – etiquette info is usually posted on your broker’s
website. Unfortunately you can’t practice placing demo orders
this way, so be really mentally prepared the first time you do this.
At precisely one minute before the announcement time (i.e.
8:29am) call your broker. You want to know the price spread at
that time for the currency pair of interest. Usually a price is
quoted as a spread (of say 5 pips), such as 1.1289/1.1284, where
the higher price is for buying, and the low number is for selling.
Here now is where you have to do some very quick math. As
soon as you get the numbers it may help to write them down to
see them while you are doing fast mental mathematics. You want
to add 15 pips to the high number, and subtract 15 pips to the low
number to get your entry prices. Then calculate what your stop
points are (hint for easier mental math, just add/subtract 5 pips
from your starting numbers since you padded 15, take away 10
leaves you with 5. Then you want to figure out your 20 pip limit
points (hint, just add/subtract 35 to your original numbers). It is
very important to have the limit if you are doing this away-fromcomputer
strategy as how will you know when to exit your trade
profitably? At the resource website is a little chart you can
download and print to make your life easier with all of this.
The reason for the 15 pip spread is since you can’t see what the
highs and lows are for the past couple of minutes you have to
simply take a chance that 15 pips will be far enough apart to not
get falsely triggered into a trade.
Call your broker three minutes after the Announcement time, ask
if you have any pending entry orders, and if so then tell them to
cancel it. Ask the broker for the current price spread and if you
are still in the trade and the price is over your entry point then tell
the broker to change your stop to your entry price (to lock out loss
potential). Needless to say this method does involve a bit more
risk, but it can be worth it.
Good luck with this approach if you plan on using it. It should
work for you, but before you do first make sure you practice with
your demo accounts in front of your computer to be sure you fully
understand how to do this. You may want to do so demo trading
first with the numbers suggested above to see how well it works
for you.
AT NIGHT TRADING
This isn’t really a technique but rather a suggestion on how to
capture those price explosions when you would normally be
sleeping.
If the Fundamental Announcement calendar says there will be
some announcement that you think may be a profitable
opportunity during hours that you would normally be sleeping then
do this.
Set your alarm clock to wake you up ten minutes before the
announcement time. Hopefully your spouse will be agreeable to
letting you do this. Set your mind to jump out of bed at the alarm;
no time for snoozing.
Proceed to turn on your computer, open your charts and your
trading account (live or demo for practice). You should have
already decided in advance (you may be too tired to think) what
currency pair you plan to trade and be aware of any technicals
(i.e. trends, fibs, whatever), and you can now take a quick look to
see what happened if those things are of any interest to you.
At two minutes before announcement time start calculating your
buy/sell entry prices & stops. At one minute before
announcement time start entering your entry orders, taking any
last minute price changes into consideration if needed.
Now you wait and see what happens. If by three minutes after
announcement time nothing happens (dud) then close your
pending orders and go back to sleep. If it does skyrocket then
close your other pending order, replace your stop of the active
order to the entry price to protect from any losses.
Next decide what you want to do, either set it for a 20 pip limit (or
better if you feel it’s going well) and go back to bed, baby-sit it for
ten minutes to catch more profits, or if you expect that it should
continue in that direction for a while (due to your technical
analysis) then leave your stop for a zero loss (or stop at some
profit level if it skyrocketed far enough) without any limit and go
back to sleep. You’ll sleep well knowing that you won’t loose
anything, but could wake up to a nice profit.
Either way, by five minutes after announcement time you should
go back to bed. Try not to think about the trade to fall asleep
easier. Basically you took 15 minutes out of your sleep schedule;
is it worth doing this to possibly gain 20 or more pips? Me,
personally, I think so, and so does my wife.
THE “BIGGER CHANCE” APPROACH
After having some experience with 20 pip limits and feel quite
comfortable doing this then try a 30 pip limit or even 35.
Remember, the farther your limits the greater the risk that it might
not work out, however 30 pips is still relatively safe.
THE “GONE SURFING” APPROACH
If you have some time available in front of your computer then
don’t use a limit, go for even more pips. As soon as your trade
has been activated and moves up at least 10 pips then
immediately replace your stop to be at your entry price, and
cancel the other pending entry order. After this the worst case
scenario would be a zero gain/loss. After the price has gone 30
pips above your opening price then replace your stop up 20 pips.
After this the worst case scenario would be that you gained 20
pips, you can’t loose! All this should have already happened
within 15 minutes after the Fundamental Announcement time.
You now have two choices:
Choice 1 – Baby Sitting - Continue trailing your stops following
your profits by 15 pips (or 10 pips before the pull-backs – this is
the better way) and see how far it goes before you get stopped
out. You could easily get 35 to 100 pips this way in one good
trading session. Be sure to get out before end of market overlap
closing time (what is “market overlap”? See below).
Now look at chart 4. As you can see you could have easily
captured your 20 pips, had you set your limits, and would have
been out of the trade within 5 minutes after announcement time.
However if you had done a little baby-sitting you could have
gotten an easy 60 to 70 pips. You would have also noticed, by
checking larger time-frame charts such as 5min or hourly charts
that the price was trending up (see chart 5 – right side), and since
the price explosion went up that alone should have indicated to
you that there was a good opportunity to baby-sit it, and get out
before market overlap close time.
Choice 2 – Sailing On - If you are somewhat more of an
experienced trader and see that the price is moving in the
direction of the trend (according to any of your technical
assessments – i.e. acting as an extension of a large fibonacci
swing) then you may want to simply leave your stop for a 20 pip
gain (so in the worst case scenario you at least made 20 pips)
and let it ride for a couple of days (or limit where you forecast a
reversal – i.e. near the end of a fibonacci extension or close to a
trend line bounce level). Could gain 100, 200, 300 or possibly
more pips. Use protective stops to secure your profit at
lows/highs (trailing stops). This is by far my favorite method. Just
make sure you exit the position before end of trading on Friday
(why? See below)
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