Since EURCHF has proven stable over the last year or so as remaining above 1.2000, does it appear that [B]there’s a relatively risk-less way to profit by buying near 1.2000 and setting small T/Ps?[/B]
I’ve only read a smattering about this. It seems to me that:
The Swiss National Bank is working hard to keep the price over 1.2000
The price remained over 1.2000 for the last year
There were no significant spikes or drops (temporary or permanent) below 1.2000 (eg. a candle that closed above 1.2000 but had a low of less than 1.2000)
Would it make sense to scalp EURCHF, buying as the price approaches 1.2000 and TPing with a few pips (3-10)? What kind of stop-loss would be a good idea in this case (assuming of course that the right answer is still 1-2% of your account balance).
I did some preliminary analysis, and it seems like a no-go.
If you consider 1.2000 the floor, with 1% money management, current prices are around 1.27. That means a drop of 700 pips to hit the floor (say 800 to have a 100-pip buffer). If 800 pips is 1% of your equity, that means your account should have 80,000 pips; on micro, that’s $8000.
Well, anyway, if you had that kind of cash, you could open a buy even at today’s prices, and not suffer more than 1% loss if your account hits bottom.
The problem is that the price, recently, rarely goes below 1.2500. So it’s hard to get buy signals.
You could buy now, and maybe you’re buying at a local maxima, and the price will hover under 1.2700 for months – nobody can say for sure.
Selling is also not a good idea, since the price could sky-rocket (there’s a floor, not a ceiling), and you can lose everything.
When I tried it with buying between 1.1950 and 1.2050, in the last year, on 1M and 5M, I only got one signal. So it doesn’t seem viable.
I still feel like this can somehow be used as a tactical advantage though. I just can’t figure out how.
I think the problem here is you are mixing apples and oranges. You are trying to base very short term scalps of a few pips on, essentially, fundamental analysis. Just because the price is approaching your magic 1.2 it doesn’t mean it will get there. Likewise, the Swissies may want to keep their currency above 1.2 but what is to say they will not take action until 1.15? That is a pretty big distance, especially if you are looking for scalps.
If you are trading small time frames and looking for 10 pip moves, ignore fundamentals entirely. If you are interested in trading fundamentals, ignore 10 pip moves and 100 pip moves. You are looking for much larger moves over much larger time frames.