Webring - Forex
Hi,
Friday was a great day for scalping the index futures. Mostly I trade the Dax, but simialr trades can be made on the ES and Dow, at pretty much the same times.
Usually I use the pivot points for currency trading but I’d like to show here how these are applicable to index trades too. I made many scalping trades in the European session and a few during the NYSE open, but the chart below refers specifically to pivot points and shows the trades made. Notice that the pivots are sometimes hit, sometimes exceeded and sometimes fail to touch them. In any event the risk/reward is good and the required stop is small, as the trade either works or doesn’t. Please, when taking a trade off a pivot DO NOT let it go against you by more than a few points, preserve your capital and re enter later. That’s the real beauty of these points, they are recognized by many traders and are unambiguous (I use the US open and close as start/end points. In fact they are better than trendlines imo as these can differ from trader to trader. These pivots are even better to use if they fall in line with areas of support/resistance and Fibonaci retracements. Always keep an eye on the Bollinger bands too to verify that you are entering at an extreme. I also check the stochastics for overbought/oversold scenarios.
Please refer to previous blogs for more information on any of the above, you can use the search bar above. Also make sure you watch the videos as it is often easier to follow than the written word.
OK, the chart below shows Friday’s trades, I have added notes and arrows to show the entries and exits. If you have any questions or comments please leave them here and I’ll get back to you ASAP.
Ok, now a bit about consolidation. How often have you just sat there and watched the market do nothing? Get impatient or frustrated and walk out for a coffee, come back and the market has moved a ton?
Again, the pivots can help with that, look at the Euro/Usd chart below, the EU consolidated around the pivot point for about 45 minutes (seems much longer when you’re watching lol), then shot up 70 pips. I often place an OCO (order cancels order) either side of the consolidation area with a small stop and get filled automatically. That’s exactly what happened at 10:30 EST (I was outside), got filled at 1.3940 (20 pip stop). When I came back 15 minutes later the price was hitting R1 so I closed the trade for 40 pips.
PS Mark McRae is giving out some highly useful trading techniques, you can check them out here.
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