The USD had been weak ever since the FOMC Minutes

The trend continued in Asia

  • The stops were either obvious or, if not,
  • flagged here
  • and here

Sometimes it easier than other times. Your bank manager will not object if you exploit the easy times.

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To recap:

First of all let's define some terms. It helps to be on the same page.

I want to define what 'works'.

Easy, you might say, something 'works' in trading if it makes you money on the trade.

No. Sorry. This is incorrect.

When you are trading you are acting in an uncertain environment. You can take a perfectly logical trade that may not make you money due to some unforseen, and unforseeable, event causing price to move against you. And, sometimes, it just moves against you without these strange events.

What is important is to focus on the process, the steps you take leading to that trade.

One way of doing this is to develop these steps and then back and forward test your ideas, until you have a high degree of confidence that taking these steps, and the trade, will give you positive expectancy over a number of trades.

If you lose money on some of the trades, thats to be expected. As long as the losses and wins stay within the parameters you've defined and tested on then you've got a process you can be confident in.

Moving on.

I see many, many approaches to trading. But right here I just want to focus on what I sometimes also see, an 'obvious' trade entry. I'm not saying to change whatever approach you are using, or to use this only, or even to use it at all. But, it may of interest to some, at the very least it can supplement an existing approach.

The example I am thinking of is from a recent post, that I titled: Cable on the move ... watch out above? (the first link above)

Its based on well-worn, and proven methods, both 'fundamental', 'technical' and 'order flow'.

The fundamentals were showing a weak USD in the wake of new information reveled to the market (FOMC Minutes in this case).

The technicals were showing an obvious horizontal line of resistance in GBP/USD.

I speculated (I didn't have the info, as I said in the post) there was a significant build up of stop loss GBP/USD buy orders. There were in EUR/USD, AUD/USD and NZD/USD (in the second and third links, above)

Just to be clear, these were all highlighted before the event, not in hindsight.

Also to be clear, I only highlighted the potential for an entry into a trade. Yes, there is much more to trading than entry; where is the stop, where is the profit, what to risk, what is the R:R. I'm not pretending to give you a complete system here, just one component. And its not going to be everyone's taste. And thats fine. Use it, don't use it, we all have to make up our own minds.

But, i hope it helps.