Wondering if you can help me out with a little research project 
so whats the project ?
have trades open, but not specifically for the NFP…
so no
I’ve been sitting on a short position with GBPUSD since the 16th of September. I’m thinking tomorrow will work out in my favor and I’ll finally hit my profit target.
One short since the 16? what about that run up that peaked about the 23, you held on through that?
I’m curious how did you determine your entry and profit target? I’ve been trying to trade much shorter time frames.
In my humble opinion, the only way to trade NFP is in fact not to trade it at all. Often times price will move wildly in one direction only to swing back the other. Its not good trading based on technicals… its a punt!
Better to wait until PA has gone where its going, settled down and trade the chart from there.
I don’t think I can link my blog to here, so I’ll just quote directly from it.
Here’s my posting from the 16th as I made the trading call:
[I]"This set up was taken on a daily chart, price action being the primary focus. Only indicators used was a trend line and Fibonacci retracements and extensions.
Over the last few weeks, GBPUSD has been on a downtrend. The market began to retrace a bit after it hit the area of support around 1.6100. We can determine that to be an area of support as if you look back you can see that price has dropped to that area only to bounce back up.
As price began to rise last week, I drew an upward trend line. The idea behind the trend line is to not get faked out by any bearish signs that might compel me to enter a short trade prematurely. I would more or less be looking for a daily candle to break through the trend line and then close below it.
Two days ago price did turn around. It hit the trend line and bounced back from it a bit. In doing so, it created a bearish candlestick pattern known as an evening star. The next day solidified the bearish move by closing below the trend line. By having both the evening star pattern and the break of the trend line, it was safe for me to say that the market was currently bearish.
However, I wanted additional confirmation that this was just a retrace and not a complete reversal in the market. I drew Fibonacci lines from the high made about a month ago to the low from a couple weeks ago. It was discovered that the evening star pattern originated around the 61.8 retracement. That particular line is considered to be the Golden Ratio as price commonly bounces off that area to return back to the original trend.
This gave me all the information I needed at this point to know that I was going to be entering into the market with a short position. Now it was a matter of selecting my entry, my stop loss, and my profit target.
My entry would be 10 pips below the low of the candle that closed below the trend line. My stop loss would be 10 pips above the high of the evening star pattern. And finally I redrew Fibonacci lines again, this time going in the opposite direction. I wanted to mark my profit target at the 161.8 Fibonacci extension.
I found that it is common that a successful bounce of the 61.8 retracement line can push the price towards the 161.8 extension line. It does not always happen like that, but often enough that I always set that as my initial profit target.
If this trade does move in my direction, I do suspect that I might have to stay in the trade for a couple weeks. A lot can happen in that time. I might pull out early with profit. I may even add more units to the trade. In the end, I will allow price action to make that determination for me."[/I]
Hopefully that will shed some light for you on how I determined my entry. As far as the retracement is concerned, it was expected. Price dropped heavily on the 18th. I did not anticipate it to keep heading down from there especially when it was about to hit a line of support around 1.6100. So I sat through the retracement. Yeah it sucked watching hundreds of pips vaporize, but based on my analysis I still believed GBPUSD was a bear. Furthermore, it had a way to go yet before it would hit my stop loss.
And I was right. Price kicked right back down and broke that line of support. My profit target from the beginning has been 1.5550. Yesterday after this final retrace I added another position to the trade as it moves on towards my profit target.
This was turning out to be a nice little trade for me. Between the two positions in GBPUSD and my GBPCHF short I took yesterday, I’m sitting around 630 pips in profit.
If you’re trading shorter timeframes, you would have not given yourself the opportunity to make this trade. I took this trade off a daily chart.
Thanks Mastergunner, it’s interesting to see how longer term traders look at things.
[B]Mastergunner99[/B]
Always a pleasure to read an in depth post outlining the considered reasoning behind the entry to a trade. Especially one as long as that. Congrats on a successful outcome!
If you had a SSD and RSI up on the day chart you might have been able to hedge those lost pips on that retrace against your longer term position. Removing it after the retrace stalled. Would only have cost the spread to hedge that position and saved you a few hundered pips in the process.
Just a thought? As I notice the SSD and RSI spiked up markedly.
Hmm… that was an interesting read. Will check out the indicators and the set up to see if I can improve on my strategy
Anyways, I did trade the NFP. Posted the results here
at the risk of being redundant… what’s the research project? little late now eh? Yeah, I know, you’re researching how many people will respond to a research project…
I was thinking about trading the NFP, though we had a storm and got blacked out for 40 or 50mins so I abstained as I could not finish my research and make a decision.
I did however watch the reaction when it was announced.
Too many indicators for my taste. Trend-lines, horizontal lines, and Fibonacci is all I’ve been using lately. I used to use RSI , but decided I no longer really had a use for it other than to spot divergence.
But to solve the issue of the retracement, I wait out the retracement and add to my position as price continues downward. That way when I close out, my risk reward is greater than when I first entered the market.
Could have went short on the audusd and then went long on it.
Thought I should stay out though.
This sounds like a good strategy Mastergunner and most times I can see where this would pay off. The only problem I can see with using this aproach is where the ‘retrace’ in fact no longer becomes a retrace but the new trend.
Obviously you can close out your existing position at BE or plus ‘X’ pips. But a problem might occur where you have waited out the retrace and spotted a turn (in this case) back down, added to your position only to find the original retrace is in fact a trend and continues up doubling your original loss.
Besides SSD and RSI there are one or two other indicators that could help eliminate this, a particular favourite of mine being Zigzag.
Sure that can happen. However. such problems are generally eliminated using proper money management.
Price action also lets you know what’s happening. A bounce off the golden ratio coupled with a trendline break as well as a strong candlestick pattern is a good indication of the end of a retracement and the continuation of the previous trend.
Lastly, there is no claim this is any form of the Holy Grail. However, in the method I trade, the risk reward is always in my favor, thus allowing me to sustain such loses and remain profitable.
[B]Mastergunner99[/B]
I can see I’m trying to teach [I]‘my Grandmother to suck eggs’ [/I]here!
You’ve obviously got it covered… but worth pointing out possible problems in this forum for the noob’s.
I understand that. Which is why I retorted with a solution to the problem you posed.
Also stop loss movement is essential as well when I add to my current position. The first order is moved to break even. So if trade closes at a loss I have maintained generally the same initial risk reward. However, if trade moves forward I ultimately increased my risk/reward.