How to trade the Euro in this economic climate

As you all know the Euro has been under immense pressure with the situation in Greece, which I believe to be just the tip of the iceberg. I am not primarily a fundamentals trader although I do trade most news announcement for their spike value, but in is clear that the ECB and other Eurocrats are doing their best to polish a turd. This is a unique opportunity and my gut feeling is that there is more to come in the coming weeks and months. Now the thing is, it’s no good just jumping in with wide stops and most of you know my max stops on the Euro are 40 pips (very rare that I use such a massive stop). That means that the entries need to be precise and timed for either maximum momentum (Like Trichet’s speech today). It sent ecstatic shivers up Europhiles backs and they bought the Euro like it was going out of fashion after a minor drop on the interest rate non event. This was a great opportunity to get short just above the Pivot point around 1.3678 for a good momentum ride down to below S1 at 1.3573 for over 100 pips with little interruption. The shorters took profit from below S1 and drove it back to S1 where a new wave of selling began breaking the weekly pivot at 1.3590 and a good down wave to below M1 and so forth.

I guess what I’m saying is this:

1. Get those Pivot points on your charts if you don’t already have them.
2. Mark your support and resistence areas clearly.
3. Try to get in as high or low as possible with a tiny stop, it’s cheaper to enter three times with a 5 pip stop than once with a 30 pip stop. Take a deep breath in between and don’t get hypnotized by those dancing colorful charts and lines. Stay Conscious.
4. Look for entry points around an event or speech when momentum is high. Know that all momentum is a state of mini hysteria and it will pass, so ride it fwiw and get the flip out.
5. Stay focused around these events, if you have problems with that get this from Guy Finley’s “Secrets of being unstoppable “ as soon as you can afford it.  ($50 – mind you if you can’t afford it you shouldn’t be trading at all). Get on to his mailing list and listen to the man, he’s one of the few “Gurus” who is not after your wallet.
6. If you haven’t bought Forex Rebellion yet, you are being stingy and stupid, it’s a great visual confirmation of a trend change and even though I usually enter before a signal is given, it confirms my entry and for some of you will be the entry.
7. This is a business and when you sell someone is buying, forget about having a laugh, this is serious work, laugh when the trade is over and the dosh or mullah or dough or whatever your preferred terms is is flipping banked.

Ok, here is another tip, if you suffer from low self esteem, or have run a big loss get over it, get some hypnosis cd or read a book, don’t bring a miserable self to the trading zone because you will regret it.

Finally, there is a correlation between the equities and the USD, as equities get bought, USD get sold usually (this does change depending on the economic climate), but for now, it seems to hold. Note, that often the Euro gets bought during the US morning session and then starts dropping towards lunch time (not always), but it is worth noticing how diffrent times of day bring different action. There are cycles and a collective herd memory which is worth studying and applying.

Last few nights (UK time – midnight or 19:00 EST) I have set limit sells on the Euro with a 1:2 Risk/Reward ratio, left then in and picked up the profits upon waking up from my slumber. Doesn’t always work but when a acuurency is under duress, it’s a higher probability trade.

Note that this situation can change any time as I am not an analyst, I trade what I see and my opinion is not what I trade, although it does lead me to some profitable conclusions. Who knows, a fairy with a magic wand may appear and make it all better for the way overpriced Euro (my personal opinion). So stay alert and focused.

Have a good day

Cheers,

Mark

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