Forex trading notes

These are just my notes on trying to trade the financial news in the spot forex market; I was making progress but then I had a big breakthrough in an equities trading system and I'm focusing on that exclusively right now. This page is only intended as possibly being thought provoking for anyone trying to trade forex; obviously, any of this could be wrong and absolutely no warranty is expressed or implied! Good Luck!

can't trust calanders - check 3 every night
**market USUALLY waits for last report but not always - can you estimate this beforehand?? - plus commentary clues you in... be aware of order issues
big important suprise plus report coming can = medium move...
up at 5am or 7am usually, can also take naps
ANY of these reports can generate a big move in the market if it is a big enough surprise...
if the news day is indeterminate, just don't trade
conflicting reports?
i think that it is USUALLY simple, if one or more reports in the batch is a suprise the currency pair will move?
check fib analysis on dailies for orientation
oil and political news from reuters also?
breakout technique on five min charts
find correct stop distance from breakout perspective? YES - stops are at the original range point - or 4 pips below? - YES
**more than 4 pips?
**to opposite range point?
reuters and gft news feed - consensus versus actual
probably occasionally will have to trade first segment and decide to stay in during move based on news or get out and just make 5 pips (or very occasionally lose 10 - out at breakout)
DON'T TRY TO PREDICT DIRECTION - only volitility
it boils down to the language these guys use: the word "slightly" is small, underneath expections is bigger, shocking is huge etc...
eventually acquire a feel for HOW reports will move market (direction from fundementals)??
big days can be right next to each other...
get a feel for how market itself moves - is there PRESSURE?
lock in if SIGNIFICANT move that still hasn't hit your target?
wait, manual trailing stop based on the CHART is probably the best way to lock in; have to ride through first fight, then once through place stop at obvious reversal point relative to first fight, then second fight, etc?
**ARE there any significant 2nd breakouts any more (after one segment)? (or just ones that get close that can trick you?)
don't trade third breakouts? - if up than down than up or visa versa? (at this point, is it REALLY the report that is moving the market?)
make an estimate AROUND the major levels based on average daily movement? (offset analysis done - determined 60 pip ave) - YES
so come up with an estimate of movement based on level of suprise? YES 30 to 35 - 60 to 70 - 90 etc
cut estimate short if unforseen news comes out?
10 am is still important, get out by...

could just stick to big obvious surprises at first...
is weaker news better than stronger news for volitility?? NO
lock in? or just ride it with alerts above where you'd think about locking it in?
plus if you lock it in and it's not used and you forget to cancel, it's a ticking time bomb...
actually, if it moves significantly (bigger than one regular segment) you lock it in AT THE BREAKOUT only, until it moves again significantly?
so let it RIDE or lose a little...?
**or lock it in at break even or 5 pip profit (25 - 20 pips to move...)?
if it only moves 20 it still won't go past the breakout again if it's a suprise? NO - it will
actually, i think that stops will be infrequent enough to only ever just go after the first 35 pips...
**the pace of this varies, get used to the full range of it
hedge half way thru 60 pip estimate?? locking in is just too expensive...(but hedging can get expensive also...)
could definately be occasional days where suprises just don't move the market...(but it clearly works most of the time)
if your not going to trade some or all slight suprises then you have to go for the entire move on big ones?
**calm before big moves? (as opposed to slow meandering between breakout points...) then KICKS...
stops and limits??

it's not going to be easy but it looks like a fighting chance...
everything looks solid - stops, volitility prediction, targets, and direction
not an averaged system, so one trade can't make or break you!
kind of a 'ZEN' state of mind...
breath deeply...
snake eyes to reduce eye strain...
RELAX! your trading peanuts! (your units are in line with your experience)
it's a whole new ball game; i have all the conceptual tools i need to make this work now (no mean feat), now it's time to fight to make it work in real time...
this is about PIPs, and they are HARD WON. a pip can be worth 1$ or 100$ or...
shooting for 50 pips a week or more...
pull out the week's earnings by check...
Nov was atypical "slow" month where the news was apparently consistantly not suprising...ADJUST SYSTEM TO HAVE GOTTEN THROUGH THIS
actual earning potential is a TOTAL UNKNOWN
the successful consistent execution of this is an ART - the money is secondary (but will follow)
better moves on us news with yen or aud if cad report out at the same time? YES YES YES
big suprise all by itself = bigger lot size...
hmmm, only trade big suprises and hedge just before breakout point, off 5 or more after breakout point (close trades after moves past opposite range point)? plus STAY IN till 10:00am - only hedge once - also could close original position on reversal and ride hedge position...hmmm,go in the box again looking for third breakout (or close)?? (30pips loss then, max)
what about trading the slight suprises for first "thrust" only? if is goes 20, make 2-3. if it goes 25, make 10, etc...? (if just US news trade yen?) plus big suprises for first thrust plus one hold in the money also? are stops as big as i've designed for this approach? (in other words, if it doesn't just go right into the money, get out)
or just trade big suprises first thrust plus one hold in the money only
hmmm, the US news must be more important to USD/CAD than to USD/JPY or EUR/USD (especially)...?!? Shifts around? (I've watched both the us news and cad news move the market equally well based on suprise for six months...)
**plus dif "structures"?
doller/yen moving at 1 + 5 gmt? NO
OH I SEE!! (moved the same amount, just differently...)
answer these questions (**) by studing 3 months of trades
wait! could run the t-stop approach only on big suprises! (but the number...)
(write a program that guages pressure than acts?)
what about entry orders at halfway point between breakout and breakout verification point with alert on big suprises? (even if other reports are coming out) plus limit order? plus stop at original range point - opposing entry orders (straddle) plus alerts as safety stops but run manually? actually should be 3 pips past b.v.p. then tighen up as it moves...(buy entry orders are set 5 pips above desired entry point) two seperate alert systems? YES YES YES

(you can occasionally trade pressure but don't expect much, timing has to be perfect...)
looking at 1 to 3 big suprises a week, aren't we? plus 1 to 3 slight suprises...
so if trade slight suprises going after first good thrust and cutting way short if doesn't happen - works if you can usually break even and ocassionally make 10 and rarely lose 2-3 pips(relative to formal system which is stop at five pips below original range point (or at range point?)plus hold till 10:00am or 25-30-35 pips alerts (lock in?) mak- e 17 usually, lose 18 or 23 rarely)
and if trading big suprises going after first thrust plus holding through first fight and possibly second then cashing out or giving it till slightly past breakout point as a stop (relative to formal system which is stop same as slight suprise (or opposite r.p.?) plus hold out till 10 am or 30-50-70 pips alerts plus lock in at break even or more after first fight)
85 percent of this is showing up EVERY TIME and TRACKING it effectively...
automate slight suprises (demo first) and trade big suprises manually? eventually automate big suprises? YES YES YES

i think that it is rare that either level of suprise doesn't move the market as estimated and 2nd break out behaviour is just a symptom of this rare occurance - i think that there are definately times when either one or the other country's news doesn't affect the macro movement of the currency but both always generate short term volitilty as estimated. I think that when you see short tight-ranging behaviour for a number of weeks it's because the news hasn't been suprising at all...
even if this isn't correct there are ways to deal with it...(reduce lot size, determine which currencies (yen,aussie) have been responding to their own news with volitility indicator (plus atr?)and trade those for a while...keep track of cad and us suprises so can spot a non-responsive trend in one or the other, etc...monitor best pair to trade us news on? commentary could point out positive potential movement but not negative (because of my short time frame))
stops should be full amount always because of rough spots like beginning of Nov? Actually, i think i will just have to hedge both big and small suprises if trading goes through patches of more "contentious" trading (trades still move the estimate just needs more room to get there?) so go in the box at 6 pips past the original range point and hold till second breakout....(mostly just trying to make most of your loss back) - could only do it the second time it hits...
it is essential to get as emotionally detached from this as possible...(automate as much as possible and DON'T WATCH IT, just react with procedure)
can automate the "proactive loss reduction" process alot also...(just shooting to break even unless...)
I have seen big suprises on yen a 4pm move, but slight suprises? - no
for that matter, don't REALLY know if the cad responds to it's slight suprises consistantly...
hmmm, follow your INSTINCT - what does your instinct tell you? (you can never nail down the order in this all the way...)
you probably have enough grasp of order - use instinct to reduce losses...could get out then get back in? also use instinct to hold positions...in other words, to increase the yeild of the mechanical system...or to augment or vary lot size...

Again, these are just my notes on trying to trade the financial news in the spot forex market; I was making progress but then I had a big breakthrough in an equities trading system and I'm focusing on that exclusively right now. This page is only intended as possibly being thought provoking for anyone trying to trade forex; obviously, any of this could be wrong and absolutely no warranty is expressed or implied! Good Luck!

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