10/21 Analysis: Multiple Entry Possibilities, Different Results On Each
About 9 minutes into the London session, we see the AUD (orange line) has clearly been the weakest currency for quite a while. It also has a steep line down to the right which indicates momentum happening in the market.
On the upside, we can pair it with a few different currencies. When you watch the entire video analysis, I’ll show you 3 trades total so you can see how the results can vary depending on which pair you choose.
In this example, the CHF (turquoise line) is strong with a steep line to the far right which tells us there is current momentum on this currency.
- AUD/CHF SELL
Whether you entered right way (market order) when you saw the pattern on the indicator or set a limit order 10 pips below the opening price, you would have hit your breakout profit target of 20 pips on this trade.
When you watch the entire video analysis below, I’ll show you 2 additional entry possibilities with different results:
[00:00 – 06:15]
[slide] [1st view indicator: yellow / purple / blue up, orange / green / lilac down]
Hello, I’m James Edward from CompleteCurrencyTrader.com, here with another Currency Strength Analysis training video. And, today, I have three trade examples to show you which will demonstrate how, depending on the pair that you choose to trade, how your results–or the outcome of that trade–can vary.
So, this is what the indicator looked like at the London Market Open today. So, doing our initial analysis, you have a fairly obvious first trade. You have the (orange) Australian Dollar (AUD) that is moving steadily down to weakness. It’s been steadily trending down over the last sixty minutes and is continuing to do so (over here [points]on the right-hand side) of the indicator. And, then, to the strong side, you have the (yellow) Japanese Yen (JPY) which, again, has been steadily trending up in the hour leading into the London Market and is now moving slightly higher again. So that could be a trade that you immediately place a pending order on.
You don’t have particular steep lines so I wouldn’t necessarily suggest you enter with a Market order at this point. What I would be more inclined to do is place a pending order 10 pips above the Open price. So, looking at the AUD:Yen pair, I’d place a trade, a pending order 10 pips above that.
Now, if I go over to–
[slide] [B&W vertical line AUDJPY.MS]
(continues) … the AUD:Yen pair, these are the five-minute price bars. And this– let me just [creates cross point] get to the point–is the Market Open–this price bar, here. [points 3 bars left of lowest bar]
So, there’s the London Market Open and from that point, you can see that, initially, after the Market opened, it pulled back, slightly, [points 1 bar right] but then it pushed on down. Now, in total, from the Open, that price has pushed down around about 15 pips altogether. Depending on where you’d have entered, you may have been entering [points] down here, 10 pips below the Open. You may have chosen to enter at some point [points 1st / 2nd bar left of lowest pt] as the price starts moving down (which I’ll show you again on the indicator in a moment).
But the point being on this trade you would have taken a loss. Despite the fact that the trade initially pushed into profit, because the Market has then pulled back, you would have been stopped out for loss. It would’ve been a smaller loss, anywhere from five to 15 pips because, remember, you are using a 20-pip trailing stop-loss. So, as the price starts moving into profit, your trailing stop follows up, pip by pip. If you’ve gone 10 pips into profit–or five pips into profit, your stop-loss is also closed up five or 10 pips there, exactly corresponding, staying 20 pips behind the price.
So, that particular trade would’ve been a loss, albeit a smaller loss than you are prepared to take–
[slide] [2nd view indicator: orange / lilac / green down, yellow / blue / purple / pink up]
(continues) … when you first enter the trade.
But if I fast forward through the indicator a little bit further–this is just five minutes past the Open–and you can see that the (orange) Australian Dollar (AUD) is continuing to push down. The (yellow) Japanese Yen (JPY) isn’t really going anywhere and that’s the reason that trade didn’t particularly far: it’s because the (yellow) Japanese Yen (JPY) has stopped moving. It’s just going sideways.
But, what you have now is the (blue) Swiss Franc (CHF) and the (pink) Euro (EUR) starting to move up. So those are two currencies that you could’ve potentially paired into the (orange) Australian Dollar (AUD) had you not traded the (yellow) Yen.
And, if I move it forward–
[slide] [3rd view indicator: orange / green down, blue / purple climbs, yellow sideways]
(continues)… just a few minutes more. This is just nine minutes after the Open. You can see that the (orange) Australian Dollar (AUD) has continued down even further. So, all in all, from the Open and beyond, the (orange) Australian Dollar (AUD) has been the unquestionable currency that you should be selling. So, every trade that you take would’ve involved the (orange) Australian Dollar (AUD), but you have multiple options: you could’ve taken the (yellow) Japanese Yen (JPY), the (blue) Swiss Franc (CHF) or the (pink) Euro (EUR) moving up.
[slide] [B&W vertical line AUDJPY.MS]
(continues) … I’ve already shown you the (orange) Australian Dollar (AUD) against the (yellow) Japanese Yen (JPY), which would’ve resulted in a small loss.
[slide] [B&W vertical line AUDCHF.MS]
(continues) … But, if I bring in the (orange) AUD against the (blue) Swiss Franc (CHF) on the [creates cross point] five-minute price charts, as well, and, again, let me bring you up to the actual Open price, which is this [creates new cross point] price bar (here), from the [NOTE: believe Mr Edw meant to say “AUD:CHF” but did state “AUD:Yen” tho chart is of Swiss Franc] AUD:Yen, [diag line to bttm low pt] the price has actually gone down 30 pips into profit.
So that trade would’ve been a profitable trade. You would’ve hit your 20-pip profit target there whether you’d entered at the Market Open or 10 pips below, that one would’ve resulted in a 20-pip profit and the same for the–
[slide] [B&W vertical line EURAUD.MS]
(continues)… (pink) Euro (EUR) against the (orange) Australian Dollar (AUD), if I bring that trade in.
This is [points long bar center, creates cross pt] the Market Open (here) and, from that point [diag line to top-most bar] you can see the price has gone up over 60 pips–or just over 60 pips into profit.
So, again, depending on where you’d entered (probably further up this price bar), it wouldn’t have been from the Open because this actually developed just within the first five to ten minutes of the Market opening, but, even so, if we work it from up here, [cross point 1 bar right of ctr long bar, diag line to top bar] a higher point, the trade has still gone over 30 pips into profit and that one would’ve been a profitable trade, as well, taking your 20-pip–
[slide] [prior 3rd view indicator: orange / green down, blue / purple up]
(continues)… profit targets.
So that is really demonstrating on how your results can vary depending on which currency pair you choose to trade. Now, the obvious option was the (orange) Australian Dollar (AUD) and you would’ve been selling the (orange) Australian Dollar (AUD), regardless of which strong currency you had chosen. But, sometimes, you do have multiple choices. It isn’t always a clear cut as taking one Sell and one Buy. Sometimes, the situation is like this where one of the currencies is very obvious but, to the strong side, you have a number of different choices and, depending on which one you go for will depend on whether you actually have a profit or have a loss on that particular trade.
There’s nothing you can really do about that: we don’t know what’s going to happen after we enter the trade. And, remember, anything can happen at any given time; we just go with whatever information is available to us at the time and, as long as we are consistent in our actions, the probabilities will balance out over the long term.
But, I thought today [points circularly right side] was quite a good example of how different pairs will behave differently and some currencies will continue to move after the Open, others will stop and it really just depends from one day to the next on what the Market is going to do. And your results can vary, slightly, depending on which options you choose to actually go with. But what we’ve seen between the (yellow) Japanese Yen (JPY), Swiss Franc (blue) Swiss Franc (CHF) and the (pink) Euro (EUR) is two of those would’ve been profitable and one would’ve actually been a small loss today.
You can see that our Currency Strength Indicator is an effective tool for picking out the highest probability, lowest risk trade set ups while avoiding market conditions that aren’t favorable. If you keep using this tool every day along with our daily Forex analysis, you will increase your win rate and be on your way to becoming a profitable trader long term.
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