Forex Question

What time frames would be suitable for short term trading and why?
I think your referring to the length of time devoted to each bar on a chart? For example 30 minutes chart, 60 minute chart etc. If so, for day trading I prefer 30 minute bar chart and 5 minute bar chart; in particular I pay attention to the 60 period moving average.

When can a trend be identified?
Most chartists argue that three connecting points minimum and the more times a trendline is tested the stronger it becomes. Personally, I look for 3 or more rising bottoms to identify an uptrend or 3 lower tops to identify a downtrend. The minimum time period is an hourly bar chart but I prefer a daily.

Is it good to use just technicals, fundamentals, news releases, or a little of all depending on the climate?
Just as you wouldn’t buy a house without checking it inside and out, the neighborhood, the schools etc; your trade analysis should cover all bases (fundamental, technical, market sentiment) as well.

How often should one trade the forex and for how long a period?
Depends upon your trading plan or trading system. I look at daily range trade strategies that trade 3 or 4 days a week and also a moving average based daily trading system that trades 4 to 6 times a year. IT depends upon what market niche your trying to exploit.

On which session is there likely to be more action or volatility?
European opening (2am to 3:30am Eastern Standard Time) and New York major economic release time (8:30am to 10:30am).

krdstock01

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Do you think it is possible to construct a trading system that only uses news and be profitable for more than 80% of the generated signals?
Yes. If you focus on the major news events. However charts and technical market conditions should be part of the equation for maximized performance. For example, if USD is very strong and a key UK indicator is released and its very bullish for GBP; a long position in GBPUSD will not yield spectacular results because the currency pair is mismatched; meaning if you bought GBPUSD; you bought a strong currency GBP but also sold a strong currency USD, so your likely outcome would be marginal. In that particular case (USD strong, UK news bullish), the preferred trade would be sell EURGBP; this way your long GBP, the strong one< and short EURO, a weak one.

maartenhuybrecht

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What do you feel is Greenspan´s true affect on the USD?
The Chairman of the Federal Reserve Board essentially dictates monetary policy; monetary policy directly affects the level of short term interest rates, which has a direct impact on the economy and ultimately the level of the USD. Greenspan also has a dramatic effect on the USD when he talks about the current account deficit; if he says foreigners may pull their money out and the dollar could decline significantly thats talking the dollar down, in which case the dollar usually takes a beating. If Greenspan says the current account will improve, then the USD tends to go up for awhile. Essentially Greenspan has a direct influence on the dollar from both a monetary policy point of view and also from a verbal point of view.

bfrenchy99

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Often news favor a certain market direction, however, when entering position according to the new data, one get´s stopped out by a spike in the opposite direction. How to avoid that?
Generally I place my stops beyond the pre-release level and only trade the major releases. Also consider what type of market your in. If the market is focused on the big picture (macro) issue of U.S. current account, then a number thats positive for the economy, such as rising GDP, also means more imports and hence a WORSENING of the current account; in a nutshell, good can be bad; it depends on market focus. Also if the USD is trending then you should expect less of a reaction in the opposite direction of the trend.
For example, if USD is weak and trending lower, and positive dollar news comes out, the upmove will likely be short lived as longer-term traders take the opportunity to sell in anticipation of further weakness once the good news “wears off”.

fhaidekker

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Is the Non farm payrolls the stronger indicator?

Non-farm payroll is the strongest indicator of the health or strength of the economy for two main reasons 1) it foreshadows all the other indicators that follows; for example; if lots of people are getting jobs its reasonable to assume consumer confidence will be high, retail sales will be strong because people are spending, industrial production will be high because if retails are ordering factories will be producing, etc etc. 2) Non-farm payroll is released early in the month so the information is fresh. Economic indicators that are released way after the fact tend to be less potent.

grlule


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what is reasonable risk (in pips) for short-term trades after news events?

I think if you trade in the direction the news implies, a stop loss beyond the pre-release news price is a good stop loss level. I cannot express it in pips because it would vary depending upon the severity of the news. For example, U.S. trade number comes in 60 bil and market looks for 54; to buy EURUSD would require paying perhaps 80 points above pre-release level; so your stop would be 90 points. If weekly inital joblessness claims came in at 295 vs 312 expected perhaps you could sell EURUSD 15 points from pre-relase, in which case you stop could be 25 points.

idim

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How I can know when the currencys goint to react whit the result of the economics indicators?

Compare the consensus forecast to actual release and note the difference; then record the price action from release time forward (I like first 15 monutes especially); assemble this information for the past 12 months or longer. You should be able to determine 1) how big a difference is needed to cause the price to move 2) how big a price move should occur based upon the current months difference between expected and actual.

jorge_ramos

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how do you trade your way around bad economic news when the news is contrary to techical trade set ups and market expectations ?

I assume your asking if the news is worse than expected and the charts and technical indicators are better suited for better than expected news. So for example if GBPUSD was in a two week uptrend and was nears the highs with a lot of congestion etc; so if UK news was bullish GBPUSD would breakout and go a lot higher etc; but the news is counter-trend, meaning bearish? I would look to buy the Pound when the effect of the bearish news wore off. I would use a one minute GBPUSD 60 period moving average and play a break above it to enter long. Most news will not change the trend just slow the trend down.

steve

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