Forex Crunch How to Make Profitable Entries in Your Forex Trading

How to Make Profitable Entries in Your Forex Trading
Eur/Usd Trading – 3 Tips That Will Make You the Next George Soros!
Forex Daily Outlook – July 29 2010
The Pound rises by orders from the King

How to Make Profitable Entries in Your Forex Trading

Posted: 29 Jul 2010 02:51 AM PDT

Guest post by Kris Matthews tradeforexfundamentally.com

Have you ever put a trade on after seeing the market run nicely in one direction only to see the market immediately move in the opposite direction? Have you ever waited for a pair to come down to a specific price level that you were certain would hold, only to see the market blast right down through your entry without even caring?

Chances are you've done your research and have a strategy for identifying turning points or trends, so that's not the issue. You've been selecting good currency pairs to trade with so that's not the issue. So what is it? Entries.

I want to show you how to make optimal entries for forex profits, but first we need to get clear on two things:

Direction: You need to align yourself to the overall direction of the market. Price action is very random, especially on the smaller time frames, and you can't afford to chase every up and down move. Instead, analyze sentiment through your forex price chart or by looking at fundamental news. Once you figure out the direction, only make trades in that direction.
Objective: What are you trying to get out of this trade? Are you trying to catch a bounce at a specific level, or to get into the market to ride a trend from the beginning?

Entries for trading the trend

The objective here is to get in, not so much at the right price level, but the right time. You want to find the setup on your price chart or in the news that most often leads to the beginning of a new trend. Here are some suggestions for entries to achieve maximal forex profits:

Look for rejection of price from a key support/resistance level. I define a key level as a level that has marked many significant previous highs/lows in the past or are marked by round numbers (e.g. 1.20 as opposed to 1.1917). I define rejection as price trying to move through it but quickly bounces back and away.
After spotting that price is unwilling to move past a certain level and reverses direction, look for a continuation of that reversal via large full-bodied candles on the price chart, preferably supported by a surprise economic data release.
Look for price to break the week's high or low after the big move described in (2).
Enter on a slight pullback (10-20%). Often you will see that after price breaks through a weekly high/low with strong volume, it doesn't pull back much. This is where most traders fail because they want to get in at a "good" price level (a.k.a a "discount") and wait for price to pull back 50-80% only to realize that the market was done making it's move and is now moving in the opposite direction and ready to blow right past their stop losses. Here's a question: Why would you want to wait for price to pull back if you know that price is going to keep going in a particular direction?

Entries for catching bounces

Now the strategy for bounces is a little different because we often have smaller profit targets and are trying to catch really quick moves. In this case, we often desire to wait for pullbacks. Here's a brief entry strategy:

Look for price to convincingly clear new weekly highs/lows with full bodied candles (indicating large volume and conviction of the market), preferably supported by a market reaction to surprising economic data (i.e. strong sentiment).
After breaking a level strongly, wait for price to come back and retest that level OR a nearby key level. As I mentioned above, price doesn't always pull back a great deal, especially after strong movement. For this reason, you might want to expect a shallow pullback to a nearby key level if price breaks very far away from the previous high/low.

There you have it. Two types of entries for two different types of objectives. I hope you find the value in combining fundamentals and technicals together to spot high probability trades in the forex market rather than getting mixed up by the randomness of price action.

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Eur/Usd Trading – 3 Tips That Will Make You the Next George Soros!

Posted: 28 Jul 2010 11:48 PM PDT

Guest post from visionsofaffluence.com

Ok, so maybe I exaggerated a bit about you becoming the next George Soros but with these tips you will definitely be able to make a lot of money.

1. Only trade it during the U.S European Overlap.

That’s not to say that you can’t have success trading it at other times but if you want to make the most of your time then you should only trade from 8am – 12pm EST because both of the European and U.S markets are open. Also this is when the vast majority of all forex transactions take place and as a result the market will be extremely liquid so their will be great opportunity for profit.

2. Keep your stops a little wider than with other pairs.

This is the most active currency pair of them all with more people trading it than any other. Because of this it is prone to erratic moves from time to time which could result in you taking a trade and the market moving against you quickly only to turn around and move back in the opposite direction. Because of this you should give your stops a little more leeway as compared to other pairs. Remember to adjust your risk accordingly.

3. Don’t be greedy.

This is a fast moving pair so you may very well open a trade and find your self in profit quickly only for the market to turn around just as fast and leave you with a loss. Because of this you should lock in profits by closing out half of your position and moving your stop to break even once your position has reached a certain amount of profit. This is what’s known as a free trade and it ensures that no matter what you will profit no matter what happens

If you follow these 3 tips you will become a more efficient trader of the Eur/Usd. This will result in you making more money in less time and isn’t that why we trade in the first place.

If you want to discover what it takes to be able to trade for a living? Then visit visionsofaffluence.com

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Forex Daily Outlook – July 29 2010

Posted: 28 Jul 2010 02:00 PM PDT

U.S. Unemployment Claims the early indicator of Non-Farm Payrolls is the highlight of today’s news. Let’s see what awaits us today.

In the US, Unemployment Claims rose last week to 464K worse than expected a smaller rise to 457K is expected now. As an early indicator of Non-Farm Payrolls it has a major effect on the U.S. currency.

More in the US, Natural Gas Storage expected to reach 31B – 20B less than last week.

In Canada, Raw Materials Price Index a leading indicator of consumer inflation forecasted 1.1% rise following the 7.2% dip in May.

More in Canada, Industrial Product Price Index foreseen 0.3% rise as in the previous month.

For more on USD/CAD, read the Canadian dollar forecast.

In Europe, German Unemployment Change forecasted to continue decreasing by 18K following 21K drop in April.

For more on the Euro, read the EUR/USD forecast and Casey Stubbs' latest analysis.

In Great Britain, Nationwide House Price Index a leading indicator of the housing industry’s health expected 0.2% drop following a four month increase.

More in Great Britain, Net Lending to Individuals measuring change in the total value of new credit issued to consumers is predicted to reach 1.3B following impressive rise to 1.5B in May shows an overall improvement in the British market.

Finally in Great Britain, GfK Consumer Confidence index, a leading indicator of consumer spending based on a survey of about 2,000 consumers predicted a 2 point drop to -21 points.

Read more about the Pound in the GBP/USD forecast.

In New Zealand, Building Consents predicted a rise following the 9.6% drop in May.

In Japan, Tokyo Core CPI releases CPI data a month ahead of National CPI forecasted 1.2% drop 0.1% stronger than in June indicating a deflation wave in Japan. The National Core CPI shows the same deflation trend with 1.0% drop.

More in Japan, Prelim Industrial Production a leading indicator of economic health expected a 0.2% rise 0.1% better than in the previous month and Household Spending continues with a 0.7% drop as in the two previous months.
Finally in Japan, Unemployment Rate predicted to remain 5.2% as in the previous month and Manufacturing PMI reached 53.9 points and is expected to remain above 50 points.

That’s it for today. Happy forex trading!

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The Pound rises by orders from the King

Posted: 28 Jul 2010 07:02 AM PDT

Mervyn King finally changed his tone about inflation, and sent the British Pound above a critical resistance line. Update on the rising sterling.

Mervyn King and inflation – Background

Mervyn King, governor of the Bank of England, dismissed the rising inflation in Britain for a long time. British inflation passed the government’s target range of 1-3% a long time ago. But King still saw the darker sides of the economy. Even when he was forced to write an inflation letter to the Chancellor of the Exchequer (Alistair Darling at that time), he blamed the rising prices on high oil prices, and played a big role in holding the pair down.

But now the tables have turned. Just this Friday, the initial release for British GDP showed a growth rate of 1.1% in Q2, almost double the early expectations. Together with the improvement in employment, there are already lots of good signs for the British economy.

Things are changing also inside the bank. In the past two meetings of the MPC, one member, Andrew Sentance, voted for raising the rates. He was the sole member to think so, but he’s backed by the new Prime Minister, David Cameron.

And now, also Mervyn King acknowledges the rising inflation, and warned about it in an official appearance. In the same appearance, he also hinted that the interest rate wouldn’t rise soon back to “normal” levels. But while it won’t rise to “normal” levels, it could still rise.

GBP/USD Jumps

The Pound faced a strong hurdle at 1.5520. This line was the highest point in February, and proved to be a strong line, succeeding in stopping the Pound time after time.

But now this line was broken – GBP/USD currently trades at 1.5630, jumping above this level and leaving dust behind it. The next level to watch is 1.5720, which was a support line in 2009, when the pair traded at a high range for a very long time.

But a more significant line stands higher – 1.5833 – this was the support line that held GBP/USD before it collapsed to lower levels, and also worked as a resistance line when the pair made an attempt to recover. If this line is broken, the road is open to the round number of 1.60, and the resistance line at 1.6070.

If the pair reverses its moves, immediate support is found at 1.5470, a line that was a resistance line not long ago, and 1.5350 – a pivotal line many times in the past.

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