Thursday, August 31, 2006

Daytrading Can Come in Handy

For the last week or so I've been griping about how I haven't been able to find any good setups. Today is no exception. Every chart I look at is either showing a range or if a pair does happen to be moving, I can't find a good entry point. That's what comes with the territory when you're trading but it doesn't mean you're completely out of luck. This is where day trading can become useful. For example, in the EUR/USD, the dollar rallied 100 pips but on a longer term chart, it still just looks like it's ranging (which is what it really is doing). However, zoom in to a 10 minute chart and it looks like a pretty nice trend! Having a day trading system as part of your arsenal comes in handy during times like these. I'm not saying you should overtrade, because that is the common problem with day traders. I'm saying that it's good to have a system for every kind of market environment. The Forex is a very dynamic market so it's important to adapt to it's conditions. With the Alba system, I was able to grab a few pips from that movement. Granted, it wasn't my big pay day but at the end of the day, positive pips = positive pips = a happy trader!

At 10:20 there was an Alba breakout and I entered 3 lots short at 2802 with a stop at 2825 and a target at 2791. My target was hit on the next candle and I closed 2 lots and moved my last lot's stop to breakeven. Unfortunately I was stopped out on my last lot at that very same candle. So you can see that although the trade is very small, it's still positive. (See chart below)

Result: +22 +3 -9(spread)= +16 pips

So what caused this dollar surge? Well all 3 US reports today came out better than expected. Personal Spending came out at .8% compared to the .2% forecast. Chicago PMI came at 57.1 compared to the 56.1 forecast and Factory Orders came in at -.6% compared to the forecast of -1%. So while the Fed may be pausing rates, the US economy is not entirely flat. In fact, the median forecast for tomorrows NFP report is 125,000 according to Bloomberg and if this number is correct, it will be the highest number of new jobs in 5 months.

I'm kicking myself for getting out of the USD/JPY trade. It looks like the dollar will hit my original target of 117.71. If you've been following, you know that I got out of the trade because of my fundamental analysis. My technical analysis was still showing buying power and that's what it is currently doing. Arghh! I still profited off of the trade but I hate it when that happens :)

NFP, Unemployment Rate, and ISM will be key reports tomorrow so I would be on the lookout for those. I don't think any long term trade ideas will pop up by tomorrow but we'll see if Alba can grab me some pips! Have a great day everyone.


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