Big Lesson Learned today- hope this helps others! NEWS Results | Forex Factory

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Big Lesson Learned today- hope this helps others! NEWS Results

  • #1
  • First Post: Jun 11, 2010 8:33am Jun 11, 2010 8:33am
ok so appearently here is what I have noticed with news. I had a long trade on chfjpy and I still do with a 100 pip stop loss, Gladly I am only using 2K lots for my trade. The trade jumped down against me 60 Pips within a matter of seconds. I could not figure out why. CHF no news today, JPY no news today. So what the heck gives?

After thinking back about previous times I have seen his happen I have finally come to the realization of fundamental correlation affect on news.

USDJPY was a mainly affected pair. The usd had bad news on red flags so what happened with USDJPY, well it tanked and as always everyone runs to the JPY for cover.

Conclusion:

This inadvertently affects all pairs associated with jpy since JPY was being bought up and the USD was being shorted. Even though jpy did not have any news related to it one bit today therefore I got screwed on the chfjpy long trade.
Am I pissed? Yes! Did I learn something? Yes! This is good to know
I will now never trade a pair that is inadvertently affected by news, I did not realize there was relation. This may be amateur to some of you pro's yet this is new to me, why I did not not grasp on to this fully prior to, this day, I dont know however, now I know what not to do.
Know when to hold em, Know when to fold em!
  • #2
  • Jun 11, 2010 8:58am Jun 11, 2010 8:58am
Quoting goods
ok so appearently here is what I have noticed with news....
News can spike every pair, no matter how random it may seem. You could avoid trading around news times all together, which a lot of people do. For short term traders, it can be a nightmare.
  • #3
  • Jun 11, 2010 9:03am Jun 11, 2010 9:03am
Quoting Jlr
News can spike every pair, no matter how random it may seem. You could avoid trading around news times all together, which a lot of people do. For short term traders, it can be a nightmare.
Yes I agree I was trying to explain the compilation. I will have to test other pairs not associated as compilation.

Markets can move any given time or day, its a matter of cycles. I have started taking interest on the COT reports and i am learning to really get to know those because you can find the true trending direction and what Large Traders (non-commercial) are pushing a particular currency. Once you have these ideas down then its a matter of using price action for your entry, use risk management but allowing enough time for the trade to become positive and ride it out with the big dogs.
Know when to hold em, Know when to fold em!
  • #4
  • Jun 11, 2010 9:08am Jun 11, 2010 9:08am
Good note! What everyone should learn from this case is that it is important to understand causalities in terms of their direct effects and their further implications (indirect/chain effects). A good practice could be to draw a map of causalities to become aware of the direct and indirect effects. Say A affects B and you have interest in C, then you may be careless. But if you knew that B affects C then you would care about A.
  • #5
  • Jun 11, 2010 9:11am Jun 11, 2010 9:11am
Quoting goods
Yes I agree I was trying to explain the compilation....
Personally, I just prefer to look at a chart. All of that FA stuff is confusing for me, and I've never had any success using it. A good combo of FA, and TA, probably is wise, but I found even that tough to execute in the end.
  • #6
  • Jun 11, 2010 9:38am Jun 11, 2010 9:38am
new rule for you - always check the calender before you trade.
Trading before the red flags is just a gamble because it is impossible to predict the release, and even if you could, it is just as hard to predict the market reaction. Best be flat for these, let the news come out and the market react. Then re assess the situation after taking time to absorb the new information.
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  • #7
  • Jun 12, 2010 2:19pm Jun 12, 2010 2:19pm
your in for learning a lot more of those big lessons...just be ready
  • #8
  • Jun 13, 2010 1:08am Jun 13, 2010 1:08am
It was just something I missed. I have learned quite a bit in trading, I learn something new everyday from what the markets tell me.
Know when to hold em, Know when to fold em!
  • #9
  • Jun 13, 2010 1:25am Jun 13, 2010 1:25am
This is the reason i have moved to trade indices like FTSE 100 intra day.

Forex is too volatile and 24 hour market does not help me.

Also the most important lesson i have learned is to specialize in any one or two pairs. With specialization, you will develop an intuition to trade in those pairs.

I know one guy who is trading USD/JPY for 20 years and he uses a great deal of intuition to know whats coming next.
  • #10
  • Jun 13, 2010 1:39am Jun 13, 2010 1:39am
Quoting kingfisher

Also the most important lesson i have learned is to specialize in any one or two pairs. With specialization, you will develop an intuition to trade in those pairs.

I know one guy who is trading USD/JPY for 20 years and he uses a great deal of intuition to know whats coming next.
I couldnt agree more about this. Focussing on one pair was probably the single biggest improvement I made to my own trading. Ive tried thousands of ways to make improvements and only a few produced any result at all. Of these, the change to single instrument trading produced the most significant effect. You could say it was the one thing that turned my trading around
Well done!
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  • #11
  • Jun 13, 2010 7:15am Jun 13, 2010 7:15am
Quoting M.A.C.Doug
new rule for you - always check the calender before you trade.
Trading before the red flags is just a gamble because it is impossible to predict the release, and even if you could, it is just as hard to predict the market reaction. Best be flat for these, let the news come out and the market react. Then re assess the situation after taking time to absorb the new information.
Sorry M.A.C.Doug, I disagree with both that comment and the one below.

Why exclude yourself from potentially some of the most profitable trading times? Besides which it's not just scheduled releases which cause that kind of volatility, particularly in Yen crosses (risk aversion can pop up right out of the blue). The best thing to do is learn the basics of fundamentals and how the market is expected to react to various scenarios, some of the time it's actually very predictable, particularly the more significant releases. Watching financial news channels ie Bloomberg can be extremely helpful, in fact I believe it's a mandatory part of trading.


Quoting M.A.C.Doug
I couldnt agree more about this. Focussing on one pair was probably the single biggest improvement I made to my own trading. Ive tried thousands of ways to make improvements and only a few produced any result at all. Of these, the change to single instrument trading produced the most significant effect. You could say it was the one thing that turned my trading around
Well done!
Focussing on one pair has benefits for novice traders, sure, but as one progresses it's more beneficial to monitor market sentiment across a broader spectrum of currencies and world economies. Apart from being more profitable it often helps explain how and why moves happen.

There is life beyond a 15m chart
  • #12
  • Jun 13, 2010 8:05am Jun 13, 2010 8:05am
Quoting kingfisher
...
I know one guy who is trading USD/JPY for 20 years and he uses a great deal of intuition to know whats coming next.
wow... 20 years. usdjpy only?
can u share who this guy is? FF member?
Thanks!
  • #13
  • Jun 13, 2010 10:06am Jun 13, 2010 10:06am
What's the best source of news for the Forex market?

I look at the economic calendar on Daily FX but they don't usually post the actual figures in good enough time to be prepared for the chart action, and I find that there's just too much going on on Bloomberg for me to filter for Forex quick enough.
  • #14
  • Jun 13, 2010 10:22am Jun 13, 2010 10:22am
Quoting Parselmouth
What's the best source of news for the Forex market?

I look at the economic calendar on Daily FX but they don't usually post the actual figures in good enough time to be prepared for the chart action, and I find that there's just too much going on on Bloomberg for me to filter for Forex quick enough.
http://www.forexfactory.com/calendar.php

  • #15
  • Jun 13, 2010 11:19am Jun 13, 2010 11:19am
Thanks very much, that's really helpful. I've set it to my local time and I'm good to go.
  • #16
  • Jun 13, 2010 10:11pm Jun 13, 2010 10:11pm
Quoting pipmutt

Why exclude yourself from potentially some of the most profitable trading times?
Because you miss the profitable set ups on the pair you know well and have developed an instinct for. I am not saying you cant be profitable, I know traders who watch and trade many pairs and do well. I am sharing my own experience, what works for me. I cant recommend anything other than what I have first hand knowledge of. Perhaps you are right, that 10- 20% monthly returns are for noobs trading one pair but for now that is all I can do and all I can recommend to others
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  • #17
  • Jun 13, 2010 10:18pm Jun 13, 2010 10:18pm
M.A.C. Just thought I would up date you, the bullish price action has continued as I had expected, I am still in the trade and now I am green.
Know when to hold em, Know when to fold em!
  • #18
  • Jun 13, 2010 11:43pm Jun 13, 2010 11:43pm
Quoting M.A.C.Doug
10- 20% monthly returns are for noobs trading one pair
Huh

Anyway, for a purely technical trader I wouldn't think it makes any difference which pair it is, a set-up would be the same regardless. By watching multiple pairs across multiple time frames simply means there's likely to be more opportunities.

Watching more pairs doesn't mean they have to be traded though, for example if you traded Eur/Usd exclusively it's still beneficial to watch Usd/Chf even though you probably wouldn't trade both at the same time.
  • #19
  • Jun 13, 2010 11:45pm Jun 13, 2010 11:45pm
Quote
wow... 20 years. usdjpy only?
can u share who this guy is? FF member?
Thanks!

He is a professor in Tokyo and he makes more money in trading then his salary. He is not a FF member.

He trades USD/JPY in Tokyo session. He has good grasp of Nikkei 225 as well. Nikkei 225 is doing well this morning, so USD/JPY has also gone from 91.62 to 91.85- 23 pips.

Thats his target is- 20-25 pips every day and only trade in Tokyo session.

The point i was making was specialization point- only trading usd/jpy and that too only in Tokyo session.
  • #20
  • Jun 14, 2010 3:53am Jun 14, 2010 3:53am
what's the professor's name?
is he your former teacher?
i'm inspired & motivated.
Subarashi, professor!
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