Ill just mention this because I feel it is relavent to the current trade. One of the most reliable ways to trade is to position yourself with the sentiment 12-16 hours before news. So what do we have coming up in the way of new. Well this morning we have the ECB and the BOE interest rate decision. So where would you want to be positioned before the news if you had to choose long or short. Short clearly. More than likely if they are going to suprise, they are going to suprise with a bigger cut than expected so short is the clear answer atleast for a G/U short. Having said that if they do suprise with a bigger cut than expected the run down will be short lived and the following rally up will be much bigger than the spike down. So my advice for those that dont follow the system to a T and sometimes like to make there own decisions is the following. Hold the current position into the news tomorrow, there not, let me rephrase that, they most likely wont cut by less than expected and so that protects you there. If they do cut by more than expected you will make a quick extra 50-100 pips. I would if I were you exit with 50 pips or more on the spike and be out, wait for the market to rally and re-enter the short if the system is still short. You could quite possable lock in a lot of profit and then give yourself a much better short entry once the Pound rallies, all provided the system is still short of course.
Now this is not what I am telling you to do and I dont recommend it unless everything I said makes sense to you. Its just a option that could give you a lot of pips and its a very high probability trade. The room will not be doing this it will be following the system as per the rules it just a thought for the more experienced trades. If you want an example of what im talking about go to forexbastards.com and look at what the A/U did the first time the cut rates 3 months ago by 1%. Sell of going into the news, huge spike down and then a 300 pip rally up. This is what ive meant when I said what used to be good for a currency a year ago is now long term bad, and what used to be bad a year ago is now good long term. Will this go back to normal, sure but it will take the world econemy stabalizing a bit before this happens. And it wont change overnight either. News trading took a while to deteriorate and it will take a while to become good again. Just my 2 cents for the night
-Sterling
Now this is not what I am telling you to do and I dont recommend it unless everything I said makes sense to you. Its just a option that could give you a lot of pips and its a very high probability trade. The room will not be doing this it will be following the system as per the rules it just a thought for the more experienced trades. If you want an example of what im talking about go to forexbastards.com and look at what the A/U did the first time the cut rates 3 months ago by 1%. Sell of going into the news, huge spike down and then a 300 pip rally up. This is what ive meant when I said what used to be good for a currency a year ago is now long term bad, and what used to be bad a year ago is now good long term. Will this go back to normal, sure but it will take the world econemy stabalizing a bit before this happens. And it wont change overnight either. News trading took a while to deteriorate and it will take a while to become good again. Just my 2 cents for the night
-Sterling
Founder of Day Trading Forex Live