Simple Forex System Trading

Not much movement.  It’s been quiet for days.  Euro traded between 1.2950 and 1.3060.  Euro/Yen traded between 101.1 and 110.7.  Is it because of the holidays?  Or a storm is brewing…

Oh, by the way, the mayor of London predicted today that euro would be history within a year.  Even with his predictions of doom, markets didn’t care.  Apparently, this guy is not a heavy weight in the financial markets.  I wondered if he received the same treatment at home, too.  He said something and his wife just rolled her eyes as if nothing was said.

via Boris: ‘Bubblegum’ treaty will mean the end of Euro within 12 months

I like to wait for the 2nd confirmation arrow to place an order.  As shown in the chart, circled in yellow, Euro/Yen had a nice run up and then stalled at around 104.00.  Once I saw the 2nd down arrow showing up, I placed a sell limit order at 103.981.  Set a 20-pip take profit target.  As you can see on the 5 minute chart, the target was hit in 20 minutes.  Yipeeeeeeeeeeee…

The up and down arrows are based on Williams Percentage Range.  Up arrow appears when the indicator breaks above -30.  Down arrow appears when it breaks below -70.

After a huge run up yesterday, I thought the pair was set up perfectly for a breakout trade – either keep going higher or breaking immediate weak support to consolidate.

So I opened a buy stop at 106.55 and a sell stop at 106.13 before London open.  Sure enough, the buy stop was filled immediately because euro was strong and yen was weakening.  Unfortunately, it turned out to be a false break.  The 30-pip stop loss was hit at around 7:50 AM GMT.

Euro continued to drop like a rock.  The sell stop was filled.  The take profit target was 30 pips away at 105.83.  This trade lasted about 1/2 an hour and the take profit target was hit.

I was planning to trade euro yen during the London open.  It was around 104.75.  I thought if it broke above 105, it should be an easy thing to profit 30 pips or so.  But I got scared because several so called analysts and experts were saying how euro had heavy selling pressure at 1.3700, and how difficult it would be for euro yen to break higher than 105.  I decided that maybe I should stay on the sideline then since several of them all said the same thing.

Poo poo!

Euro broke above 1.37 and never looked back.  Euro yen said good bye to 105 like a run away train.

Experts my ass.

Last night, shortly after London open, Euro Yen changed course of action.  After failing to break higher than 105, actually it didn’t even come close, it headed south.  After the huge run up yesterday, it spent most of day trading between 104.38 and 104.7.  So when I saw the zigzag confirming the downtrend at around 8 AM GMT, I decided to place the sell stop order.  At that time, the price was at around 104.60.  I placed the sell stop at 104.39.  Granted.  It was not the correct sell top by the book.  It was supposed to be below 104.38.  But I thought during most of the Asian session, the price was above 104.44.  So I gave it a 5-pip buffer; hence, 104.39.

After the order was filled, the price went down to 104.25 or so and took a break.  I moved the stop loss to break even and set take-profit @ 104.09.  30 pips.  Then I went to bed.  I was dead tired as it was almost 2 AM in the west coast.

Woke up this morning, checked the order, 30 pips of profit were pocketed.  Excellent.