Forex Trading Mind

It is August, the early part of the week, and there is an extremely light news schedule. Taken together, these are classic reasons why the market should be so extraordinarily quiet, as it is. For those of us not off enjoying a holiday somewhere, this can be a frustrating time: you can’t extract much alpha from markets when they are barely moving! Ironically though, there is at least one hot market boiling over right now – Bitcoin. The crypto-currency, after its

Last Friday 4th August we had the monthly round of Non-Farm Payrolls data from the U.S.A. Average Hourly Earnings and the Unemployment Rate came in exactly as expected, at 0.3% and 4.3% respectively. The headline new jobs created figure, however, was 209,000 compared to the consensus estimate of 182,000 which represented an overshoot of 14.84%. I anticipated that

In the absence of strong trends, the most success I have had in trading popular commodities such as crude oil and precious metals has been by waiting for the price to hit key horizontal levels which have acted as successful support and resistance when they were last reached, and waiting for a definite turn in the price signaling a reversal before entering a trade. I have recently taken successful trades using this method in

Forex traders usually find that their trading improves once they start to think about the outlook for currencies, and then afterwards decide which pairs to trade, instead of starting by looking at the pairs themselves. For example, if a currency has been trending up against all its most important opposite currencies, it is probably going to be the best choice for a long trade. Another aspect of this kind of thinking lies in noting which currencies tend to move up or down together.

One of my favourite themes is how the U.S. Dollar dominates the Forex market most of the time. Once you understand that, you understand that most of what Forex traders are really doing is trying to exploit a U.S. Dollar that is getting either weaker or stronger. For several years now, during periods in which the U.S. Dollar is ranging sideways, there is usually little in the way of strong directional movements between other currencies. On a side note, following the U.S. Dollar, the most “trendy” currency is the Euro.

About one week ago, I entered a long trade in Silver (Silver against the U.S. Dollar, to be precise). I entered due to the two usual reasons why I might take a trade in a commodity being present. First, the price had hit a key support or resistance level which was an inflective price extreme, which in this case was $15.63 which was a 1-year low price. Secondly, there was a strong bullish bounce which occurred in this price area, indicating a probable trend change. I find with commodities, trading qualified bounces from extreme levels is the most profitable approach, in the absence of extremely strong and well-defined trends.

Do you keep a trading journal? You probably should. What keeping a trading journal means is to write down, either in real time or at the end of each trading session, details of all the trades you made and why you made them. It can be easy to fall into the trap of thinking that you don’t need to do this or that you will look back at the end of the week and remember everything important – you almost certainly won’t. Trades often look very different in hindsight from how they looked at the time, and if you keep a trading journal you will understand how this is so.

Today I received an email from a trader who got himself into some trouble over his broker’s bonus offering. I’m not 100% sure of the full details of his case, but judging from what he wrote, the likely scenario is as follows. He opened an account and received a deposit bonus of some amount – many Forex brokers offer such bonuses, offered as a top-up to your account deposit by percentage.