With daily ATR's falling on average 15% across most of the majors and the crosses, along with several inside days, the price action chop fest has begun as the markets digest the Himalayan sell-offs, we have witnessed over the last few months.

This was intimated by how the intraday Ichimoku Clouds have gotten very finicky, like college students on triple espressos waiting to take their final exams.

Taking a look at the chart below, we can see how the Clouds or 'Kumo' have started the flipping contrast. Notice how the white portion of the cloud goes from top to bottom to top Mexican jumping bean style all over the charts for the last several days.



Remember according to Ichimoku theory, the cloud represents support and resistance levels. The thicker the cloud, the thicker the support/resistance it should offer. If its constantly flipping from thick to thin, then that basically is communicating an opportunity is right around the corner for the pair to reverse instead of continuing on in any particular direction.

Thus, if you are looking to catch any substantial move, the floor might drop right out from under you at any moment. This requires a more nimble trading approach as the flipping of the cloud results from the price action being direction less or zombie like bouncing from pillar to post looking for fresh meat. When I see this kind of chart formation, I generally result to the following tactical methods:

1) Drill down to smaller time frames (i.e. 1 or 5 minute charts) *we only suggest doing this if you've had practice/success at these levels and are choosing pairs with smaller spreads.

2) Super-size the time frames up to the larger parameters, aka the 4-hour or daily charts. This will create a pseudo-smoothing method and help one to see the larger ranges in play and play for rejections off the Bollinger Bands or 20EMA's with correlating flat Momentum readings (12 period.)

3) The last option is to stay out which has been my more enjoyable method besides the 1min time frames. Sometimes, there just are not too many ladies for me to dance with on the dance floor. When that happens, I usually re-evaluate whether I am in the right environment or or whether I want to dance at all. I do Tango dancing so if there are no ladies around, then I'm generally not dancing. There will always be another Tango Milonga to go to and there will always be another trade in the markets.

Remember the markets have a close relative called Las Vegas, and you want to make sure you are not always playing hands just because you have time and money to play. In the same fashion, you want to pick your games, tables and times to play where you are most likely to succeed. Based upon the current price action, this trader suggests smaller targets, trading pairs with tighter spreads, perhaps using Bollinger Bands and pivots if you are looking for a rejection play, and being more selective.

The chart below gives an example of such plays using the Bollinger Bands on the 1hr charts.



Chris Capre is the Founder of Second Skies LLC which specializes in Trading Systems, Private Mentoring and Advisory services. He has worked for one of the largest retail brokers in the FX market (FXCM) and is now the Fund Manager for White Knight Investments (www.whiteknightfxi.com/index.html). For more information about his services or his company, visit www.2ndskies.com.

Tuesday, September 8, 2009

Smart Ways To Learn Currency Trading

I'm presenting to you today smart ways to learn currency trading. This is a very powerful business opportunity for individuals everywhere. It gives people the chance to build their own business, from home, with very little investment.

If there is one thing to pay considerable attention to, it would be the Federal Reserve. This is the central bank in the United States. It has one job, controlling the supply of money. Usually news anchors will say there job is to control inflation, but that's typically the same thing. Since we're talking about an entity that is controlling the supply of money, obviously supply and demand is changed, so the price should change. That's very important for the currency trader. The Federal Reserve has two ways to change the supply: raise interest rates, cut interest rates. A raise means it is harder for people to get loans, so this means supply goes down and money goes up. A cut means it is easier for people to get loans, so the supply goes up and money goes down.

The next piece of advice I can give you is to try to view things from a simple point of view. A lot of times people will build up stuff in their head, making everything look more complicated than it actually is. This isn't rocket science. You're not a scientist developing a huge rocket to goto the moon. You're trading currency. It's not complicated.

Lastly, you'll want to get your hands on Forex Killer trading software. It acts as a tool that analyzes currency graphs for you. It will find the profitable tends and tell you where to buy. This makes things easier and it's like having a mentor telling you where to trade.

For years now we have been using our successful strategy to place trades day in and day out. We have mastered a system that scalps the market whenever there is any price movement, and its 100% programmed and ready to begin trading for you. It’s true…. The IvyBot
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