9/10 Analysis: Accurate Timing Reduces Risk & Increases Win Probability
Today, looking at the London market there were no good opportunities right at the open but if we fast forward just 4 minutes into the session, we see the above pattern.
The AUD (orange line) is strong with a steep line to the far right indicating current momentum in the market.
The JPY (yellow line) is weak and showing the same steep line. In fact, it’s this cone shaped divergence between the two currencies that makes for a high probability, low risk trade set up using a market order.
- AUD/JPY BUY
From the moment you see that pattern on our indicator, price went up over 55 pips. The real benefit is look at the timing of this trade, you would have grabbed quick profits just 20-25 minutes after entry.
When you watch the entire video analysis, I’ll show you an additional trade that was profitable today.
[00:00 – 05:15]
[slide] [8 currencies left pt, immed widen independently of each other]
Hello, I’m James Edward from CompleteCurrencyTrader.com. Welcome to today’s Currency Strength Analysis training video where we’re looking at two trade examples from the London morning session today. And this is what the indicator looked like at the London Market Open earlier today.
And you can see, if you do your initial analysis looking for strong currencies that are strengthening to match there against weak currencies that are weakening that nothing actually meets those criteria. These weak currencies, [indicates] here, the [orange line] Australian Dollar (AUD) and New Zealand Dollar (NZD), are actually turning back up towards strength quite rapidly; and the strong currencies, are the currencies that have been strong over the last 60 minutes. And they are currently moving down towards weakness, so you wouldn’t have any [NOTE: no such word “tradeable”] trade-able opportunities at the precise moment of the Market Open.
However, things did develop quite quickly this morning. If I fast forward–
[slide] [new view of black horiz-charted currencies: lilac takes large dive, right]
(continues) … through the indicator to just the four-minute mark, you can now see that the Australian Dollar (AUD) (which was turning up right at the Open) has, over the last four minutes, moved up quite rapidly to strength and has now got that really [indicates] good momentum that we look for–a nice, steep line. So the [orange line] Australian Dollar (AUD) is a really effective buy currency. In terms of sell currencies, you may not have anything that you really want to get into right now.
The currency that I’ve been looking at (here) is the [yellow line] Japanese Yen (JPY) because that is moving mostly [verify word 1:35] fee down, but this might be a little too early for you, depending on your skill level at the moment and how familiar you are with the Currency Strength Indicator.
I, personally, did enter [indicates] this pair: the [orange line] Australian Dollar (AUD) against the Japanese Yen (JPY) at this moment, four minutes into the Market. But, please remember that I am using the Advanced Currency Strength dashboard which gives me an awful lot more information. So I have more information available than what you do just using just this indicator.
However, it is worth me pointing out, [indicates far right] that at this point, four minutes into the Market, that is something that you can recognize. That is something that is visible on the indicator. What I’ll do is actually move this forward an extra two minutes–
[slide] [new view of black horiz currencies: blue / pink up, blue high ’til far rt; lilac just above ctr, rt]
(continues) … to six minutes after the Market Open, where, hopefully, it’s a little more obvious to you and you can see the [orange line] Australian Dollar (AUD) has continued up and the Japanese Yen (JPY) has continued down. And that might be the moment that’s more obvious to you and you are comfortable entering that.
[slide] [B&W vertical line AUDJPY.MS]
(continues) … let me go over to that chart now. This is the AUD:Yen on the five-minute [indicates top 1st highest line abv ctr] price bars.
This moment back [indicates lower line where climb begins] here is the Open price. This is 7 A.M. GMT (which is 8 A.M. British summertime, which is the Open of the London Market). So, had you been able to enter at that first opportunity that I showed you at the four-minute point, you’d ‘ve been entering on this price bar. And you can see the price in total has gone up very quickly, over 55 pips. Even if you’d waited two minutes and got in on the next [indicates 2 lines to right] price bar (here) at six minutes after the Open, again, that one or even from the top of that one, the price has gone up over 45 pips. So, either way, whether you got the early signal or the slightly later signal, you could’ve traded a break-out on that and captured your 20-pip profit very quickly.
And I will show you–
[slide] [previous view of black horiz currencies: blue / pink up, blue high ’til far rt; lilac just abv ctr, rt]
(continues) … very quickly show you one other opportunity that developed just–
[slide] [new view of black horiz currencies: yellow peaks/drops, orange/green climb]
(continues) … a few minutes later. This is 11 minutes into the Market and, what you can see now is the Euro (EUR) has continued moving down to weakness quite well and the Canadian Dollar (CAD) has continued moving up to strength quite well. And you’ve got a really good pattern of divergence between the Canadian Dollar (CAD) and the Euro (EUR).
And I’m showing you this because I did actually take this particular trade on the Euro:CAD so if I go over to that chart, now–
[slide] [B&W vertical line EURCAD.MS]
(continues) … and show you that entry–[incomplete statement] The reason I’m showing you this is because this one would’ve actually been a loss. (This is the bar [indicates] that coincides with that at 11 minutes after the Market Open.) You can see that the move did actually continued down from the bottom of that price bar. [indicates diagonal line down from pivot point] It went down over 50 pips in total.
However, as I’ve explained before, anything can happen in the market at any given time. Just because you get a good entry doesn’t guar that you’d get a good profit. And, as you can see in this case, if you’d entered at the bottom of that price bar (which is where I more or less entered), the price did quickly [indicates diagonal line up from pivot point] reverse over 22 pips there and that would’ve hit your stop-loss before the price then continued down. That sometimes happens.
Remember, what we do in trading–
[slide] [left frenetic centered horiz currencies with divergence beg rt half]
(continues) … a system like this break-out strategy where we employ strength vs. weakness is stacking the odds in our favor. It’s something where we are trading high-probability trades but high probability is not a guarantee; it’s something that works out over the long term, as long as you give that system a chance to work and the [inaudible word 4:34]… probability to balance out.
But, each individual trade has a possibility of winning, a probability of losing, and it doesn’t matter how good that actually is if the market does something different, then it is very possible for you to get a loss, and they do happen quite regularly. And, it’s worth me showing you that, that even after a good entry you can get bad losses, because that is an integral part of being a professional trader, accepting those losses and accepting them for the randomness that they are and you just keep doing what you do every day and achieve that consistency and improve your results over the longer term.
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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