My plan is starting with the time of day. I have found that it is best to trade the currencies of the market that is open. Since I have no open positions I can look at the eur, gbp, and dollar since these are the most liquid markets. I settle on the gbp/usd of which I sold last night. I begin with the weekly chart of which I cannot post since I have not enough upload images, but this chart tells me of supreme weakness.
I then look at the daily which yesterday broke through the support line that I have drawn as well as the 200 ema, with this we see a falling trendine, giving us a descending triangle pattern as well as a head and shoulders pattern break. Then we have a 20/50 ema curl on the downside which is supremely negative.
Attachment 37827

After seeing this I want to enter short and I look to the 4 hour chart, which shows a down channel. The 20 EMA broke the 200 along with the 50 breaking the 200 a while back. Then we look at the previous candles and we have a failure to break into the closes of the candles previous to hitting the down channel line, and a failure to close above the down bench candle. The current candle has failed to close above the failed candles that I just mentioned. This is bearish and with this stochastic could embed to the downside and a falling macd.
Attachment 37828


Now I come to the 1 hour chart. With this one I see failure to break above the 20 EMA, most likely the stock will continue up so I would like to see follow through of whatever I see, but the weakness is a good thing for my position. The stochastic falling off confirms the price action and tells me that a short position should be done close to the high, so then I look to a shorter term chart.
Attachment 37830


The 15 minute shows a nice consolidation with a downtrending stochastic. I write all over my charts, I traded this pair yesterday as well obviously from all the s/r levels. I shorted a couple lots at 159.96. There is a potential of a break up, but the bearishness tells that a short is necessary. I show on the 5 minute chart my final analysis as well as what happened to price and my exit.


I saw a break above the downtrend line that I drew, but I knew that there was heavy resistance ahead. We touched the resistance line and then began to fall back down with the stochastic turning down, I shorted between 160.15 and 160.22 I shorted 7 lots. During this time I would refer to the 15 minute chart and saw the downtrending stochastic, that tells me that momentum is fading. I can tell the same thing from price action, but I don't want to trade solely off of that. I covered a lot of my position, which was 10 lots at this point, close to the downtrend line on the chart. I kept on 4 lots that I covered at 159.99. By the way I am trading a micro account, so I am not overleveraging myself; nor do I feel that this trade was too much for me. I knew the long-term trend and I also knew my short-term timeframe of the trade, and I feel that knowing the longer-term trend was beneficial to my short-term trade. This trade gave me awesome p & l!

This is my first week trading with real money of which I did two weeks with the demo previous. I have never daytraded this market and have only taken swing positions. I decided to daytrade lastnight and today. I was watching the chart of the eur/jpy and the trade station was open on my other monitor. I noticed that the spread would always fluctuate rapidly along certain s/r levels and would tell of a change in short-term trend. It just did it with the gbp/usd pair that I am trading today. I included the chart that I am using to gauge this and at the point where my two trendlines meet it did it. Today, however the spread which stays usually a constant 1.7-1.8 went down to .04 and 0.2 and then to zero for a split second. Has anyone else noticed this and if so do you take advantage of this along with your chart.

Once the spread went to 0.1 in a pair at a price point I was interested so I tried a 1 lot trade but received an error message something like, "quote no longer valid" or "quote expired". At any rate, even if I could trade on abnormally low spreads, I don't think that I would, because FXCM is so far adding so much value above and beyond being merely a discount currency brokerage that I see value from paying the usual spread.

FXCM is the very first financial institution I have dealt with where I have no remorse at all over the commission / spread / fee schedule.

Yeah I agree with you that the commission is much better here. In equities I would get charged a lot on each trade and even futures that would happen. I like FXCM's fee structure. I was saying that when the spreads become volatile like that and shrink really fast and then go back to normal it marks a continuation move. I think I said a turning point in the stock in my previous post. It was a continuation move, right after it happened it caused some congestion consolidation in the price and then it resumed the steep trend. Both times I was watching the 5 minute. I think that there should be a way to build an indicator to find this in the market and then formulate a trade using the chart. The chart that I posted was a 5 minute and it happened at the second touch of the uptrend line on the chart and then pull up a current chart to see what happened. I wish I had saved a chart yesterday when this occurred on the eur/jpy.

I am glad to finally hear someone say some good things about our spread! Only those who understand the back end of this market understands how the spread works. Have you worked in this or any other markets before? You seem to have a lot more knowledge then a new FX trader.

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~ FXCM Micro Specialist

I have traded equities for almost 10 years and futures for almost a quarter of that time. I am no expert by any means. Actually, I get to start your fxpowercourse today, of which I am excited to start and see what I can learn from the instructor(s). Coming from that side there is a lot of manipulation, and I think that is why I started looking at the spread in forex so much. I saw the USD/JPY pair do the same thing last night, it went parabolic and in the process of falling down it did the tightening of spread, consolidated a bit and then fell a bit more which was interesting to witness again. This was right after it penetrated the 89.09 level, it got to 88.884 and did its spread consolidation very quickly and then took off lower falling through the 88.38 pivot to stop at 88.232 and reverse. So I think that this technique would work with a tight stop and proper s/r levels already drawn, since it happens so quick.

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iceoverflow,

oh great! enjoy the powercourse. It will give you a lot of information, but I think you may like the next two levels of courses more because they are more advanced.

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~ FXCM Micro Specialist

Are you currently trading oil?

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~ FXCM Micro Specialist

I don't trade oil directly in the futures market. I was using the usd/cad to follow the price direction that I expected as well as the chart of the usd/cad lining up, but this week I am using the cad/jpy to stay away from the U.S. announcements. I am looking at the aud/cad trade that was brought up my M. I have always followed the energy market and am enjoying the ability to do it rather easier here. I short around .53 and cover most in the 30s, I know i should say buy rather than cover but it is a habit word.

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Nice! I like watching oil and gold myself and trade according to their movements. I don't do that all the time, as I am more of a technical trader which means I only watch indicators regardless of other markets. But oil and gold is major to trading as it affects a lot of major currencies and can not be avoided lol.. I like your idea on cad/jpy that could move majorly by oil movements for sure... That will be discussed in the second course "trading the majors"..

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~ FXCM Micro Specialist

Thanks. I have always liked gold and oil. What website or whatever do you use to track the price of oil and gold? I closed my futures account in order to just focus on one market since forex is new to me. The AUD is good for gold and the CAD is great for oil. I like the cad/jpy for oil and I guess the AUD/USD would be a great one for gold. Why doesn't FXCM offer the BRL and other currencies for trading, are the ones that are offered the most liquid and therefore safer?

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iceoverflow,

For exotic pairs, we mostly have what people want to trade the most. At this time BRL is not as popular as some other pairs we have. You know who else is good for gold? NZD, New Zealand actually have a lot of gold as well as AUD, I am not sure who has more but if you research more, I think NZD makes more gold then AUD ( i think!). I watch bloomberg.com. You get almost all prices there. Also oil affects JPY because Japan doesn't have oil resources, therefore, they need to buy oil from other countries, such as Canada, so if oil price rises, then it will affect the JPY. I really like the correlations between all these markets. It is fun to do the research and learn these market for trading!

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~ FXCM Micro Specialist

If I was trying to decide between AUD and NZD to track gold pricing, I'd look to see what percentage of GDP gold exports are to each country. For example (I'm making these numbers up - I haven't done the research yet) if Australia exports twice as much gold as NZ, but gold exports account for 5% of the NZ GDP but only 0.75% of the Australian GDP, maybe the NZD is more sensitive to gold pricing. Again, I made those numbers up just for the relative example, I currently have no idea what the actual values are.

Of course, local (recent) technicals might have more sway in which of the two to go after.

I have only done preliminary research so far, but from what I have read New Zealand is a big exporter to Australia and when the Aussie economy is good it helps them. Here is a link that says that China took over South Africa as the largest gold producer and Australia is after that.
Complete Gold Mining & Mineral Exploration Information by Country | Gold CountryMine
The U.S. is above them on the list, but they have too much industry to be effected by the fluctuations of gold price; while the Aussie's are big into agriculture as well. In conjunction with gold the Aussie's are a big exporter of dairy, beef, coal, iron ore, etc. Granted these are prelim numbers and haven't been checked with other sources, but the major eastern states make up over half of GDP.

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Nice! I like both of your research and ideas! That by the way is the pinnacle of a good trader, when you do your research.

That article is really interesting on China taking over South Africa on Gold being the top producer. Too bad right now we can't trade the RMB. Like everyone else, I think the RMB will get stronger. China is moving up in the world. Since I have family in China, I am thinking about opening an account there and depositing USD in it and converting it to RMB. That is a lot of work, but I may do that.

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~ FXCM Micro Specialist