Forex is a market place where currency is bought and sold. Think of forex as a currency store. Every now and then, currencies go “on sale”. You can buy them “cheap”. A couple of weeks ago the USDCHF and USDCAD were on sale. Buying currencies when they are on sale can prove to be very profitable. Usually, in a week or 2, you can sell them for hundreds of pips profit. I haven’t seen any thread discuss forex trading this way so I started this one.
It would be nice if the “technical indicator” crowd would refrain from imposing their views here. You have more than enough threads to talk about all the things you talk about. This is a place to discuss currencies that are currently “on sale”. That is the only jargon that we need here.
Let’s define “on sale” as when price has made a new weekly, monthly, yearly or all time low. That means it is time to watch how the traders react. Are the sellers pushing the price down or are the buyers buying up the currency and making the price go back up?
There may be many days in a row where no currencies are on sale. That doesn’t bother me. It is not a problem to wait to make hundreds of pips. I’ll wait for weeks for something to go “on sale” at Old Navy or Sears so why not do the same at the forex store? I only pay full price when I have to like at the gas pump or when I run out of eggs and have to have them.
I don’t know how many people still get/read newspapers. But on Sunday, the paper is filled with sale ads to entice the buyers to come out and spend money. I look at forex the same way. The charts are like sale ads. When I see something that I want “on sale”, I’ll buy it.
I alter the fib retracements drawing tool to show the 10, 20, 80, and 90 percent levels. When price is below the 20% level, it’s “on sale”. If the weekly candle is red, there is no need to hurry. Price may keep dropping. When the weekly candle is green, it’s time to “get your shop on”. Please forgive my slang.
The last green weekly candle shows the shoppers liked the “sale” on USDCHF. Glancing at the chart, it’s apparent that when USDCHF goes “on sale” the buyers drive the price up. That’s why I wait for currencies to go “on sale”.
When I go shopping, the idea to buy cheap. Something is always “on sale”. That is where the focus is placed. The answer to your question is no. It is better to be really good at one thing than mediocre at a bunch especially when it comes to trading. I do fine at buying when a currency is “on sale” and the price is above the weekly open. The weekly chart isn’t much to look at. There is nothing fancy to put on the chart. Most traders will skip over this or try to add some razzle dazzle techy indi but everyone knows how to shop for sales, don’t they? What else do you need?
In hindsight, it looks like you can buy low and sell high with ease. It’s not so easy while the price is moving when the market is open. When you try to “Yo-Yo” the market, it’s easy to get caught on the losing side. “Yo-Yo” sometimes means “you’re on your own”. Just in case someone isn’t familiar with the term yo-yo, it’s a toy that goes down and up and down and up on a string. Originally, a yo-yo was a weapon.
How do you determine the high of your fib retracement (100%)? Your example of USDCHF is not clear. There are higher high before the location you selected. Is their a minimum time frame you go back in history for selecting your high?
Never really thought about it until you asked. I start by looking at a currency on the weekly chart. Then I make the bars narrower and narrower until the chart doesn’t look “right” and then I make the bars 1 step wider. It isn’t very scientific or technical. It is more “right brain” or visual than “left brain” or verbal. Remember “Goldilocks and the 3 bears”? Too hot, too cold, just right. Something like that is what I do.
The Sunday open saw the USDJPY go “on sale” by opening below Friday’s close. It was a nice discount. 89.34 is the low so far and the high is 90.68. I think most “smart shoppers” are happy with a gain of over 100 pips. Depending on your position size, you could have earned 5% or more of your account balance. This really is not a “system” or “method”. This is just “bargain hunting”. There’s nothing fancy on the chart, so you shouldn’t be intimidated. You already know how to shop so all you have to do is apply that to the “Forex Store” when you go shopping or trading.
An interesting idea & well presented, thank you. Question: how many pairs do you watch? and are there any you avoid (other than the Tky lira, Mex. peso, etc., the exotics)? I would like to trade one micro with my live account. Thanks again, d.
I look at all of the pairs but I do not necessarily trade them all. Some pairs do not have as much “action” as others. EUR, USD, GPY AND JPY pairs are usually OK to trade. Let me know how well your “bargain hunting” goes.
