Forex Trading Lab: Position trading strategies II
Date: September 14, 2005 14:00GMT
Expert: David Floyd, Aspen Trading Group, President
- David Floyd has kindly agreed to hosting a LIVE FOREX TRADING LAB
- Practice making LIVE Calls with the expert at your side to guide you in your thinking.
- Trade in your own trading platform and take live guidance.
- Using the 30 minutes rule
- But you need to take and be responsible for your own decisions.
Who is David Floyd?
Dave has been a professional trader since 1994. He got his start in the early days of upstairs electronic trading of the equity markets, which he still does to this day. However, recognizing that asset management and research distribution to clients was not viable for that time frame of trading, his began to focus on the FX market in 2001-2002, recognizing that his existing skill set as a trader was transferable. He now provides FX research and actionable trade ideas to clients worldwide as well as asset management services. He and his company, Aspen Trading Group, are based in Bend, OR.
Today he is going to host a LIVE Trading Lab.
****Join our Expert David Floyd when he takes the floor to guide you in making Live trading Calls. You will have the opportunity to trade with the expert on you own trading platform follow his guidance, listen to his advice before you make you call.Then hopefully reap the rewards. ***
***Your decisions will be your own responsibilty.***
He will explain on what basis of day trading technique the position is taken, then they can follow and track the market. He will reply to some questions and also make live comments on the market moves for them to track.Most of the rise for the day has happened in euro and gbp- very little move left during our session time, so DR.Sivaraman will first make Live Calls then he will go to questions because it takes 30 minutes for the market to move. Then we go back to the results of the LIVE Calls, so you will see how easy the trading is.
Forex market functions for 24 hrs, non-stop from Monday to Friday, as traders from different countries participate actively during their normal business working hours. It is humanly impossible to watch the market 24 hrs all 5 days non-stop in a week. So traders need to have certain basic understanding of the market and develop the sense to - watch the market frequently and do the trades at ease, without spoiling their health. Let the market be non-stop, but the market can be active when traders actively do day trading from different parts of the world. Please understand that the volume of traders participation and impulsive decisions determine the market moves.
Forex market structure: I will explain the ways the traders can make money in spite of big volatility in the market using simple procedures, during the big intra –day trend reversal time in the market.
The market has full of trading opportunity:
We realize that after the moves. But we need to visualize that before the moves, to earn. Keep in mind, always the quick moves are false moves. …When ever you see quick moves like spikes, wait for the full move and the high or low is not cut for more than 30 min to 2 hrs then take sell near the new high or buy near the new low to capture the swing trade profit of 30-50 pips during session change.
Forex lab steps:
Day trading - LIVE FOREX LAB: - Lab is a place where one normally put into practice the learnt procedure under the guidance of the instructor, test and scientifically accept the procedure.
Please open you Live market quote page.
FXstreet Moderator (Sep 14, 2005 11:12:56 AM)
Please find the whole speech of our guest in the left box of the chat. Be sure to read the whole speech at once without any interruption, making its reading and comprehension easy. You won’t miss a single thing from our guest host.
FXstreet Moderator (Sep 14, 2005 11:14:34 AM)
When reading the speech please jot down any questions you may have so you are ready to post them live.
FXstreet Moderator (Sep 14, 2005 11:15:08 AM)
For those who are unfamiliar with chat sessions like this, please feel free to ask questions at anytime to the moderator.
FXstreet Moderator (Sep 14, 2005 11:15:37 AM)
At the end of the session, the link for the transcript and the PASSWORD will be posted.
FXstreet Moderator (Sep 14, 2005 11:16:56 AM)
Today I am delighted to welcome back our good friend and guest speaker David Floyd of Aspen Trading.
David (Sep 14, 2005 11:18:03 AM)
Hello, sorry for the delay folks, it was a crazy morning in FX as you can tell
David (Sep 14, 2005 11:19:14 AM)
I am actually on the sidelines as of right now until the volatility calms down a bit. Let's review though where we now and some of the key levels I am looking at
David (Sep 14, 2005 11:20:36 AM)
My main focus of course is the dollar index (DXC) which as of early this morning was poised to trade lower. The last few days had shown some deterioration, technically, despite DXC trading up towards 87.90
David (Sep 14, 2005 11:21:45 AM)
While this began to play out, we went long GBP/USd at 1.8263 - then the Retail Sales in the US cameout and that was abit better then expected, hecne the dollar rallied off the 87.38 level and we escaped GBP/USd with a modest profit of 20 pips.
David (Sep 14, 2005 11:22:53 AM)
That long in GBP/USD was not designed to be a "scalp" but rather s swing trade that might have lasted several hours or a few days. However, with the markets very rangebound and erratic, a report and reaction like that in DXC forces us to take prifts, however reluctantly.
David (Sep 14, 2005 11:23:48 AM)
Since then, the market (DXC) has been all over the place, it made new lows after we sold our GBP/USD position, and now is heading back towards the previous swing high at 87.75
David (Sep 14, 2005 11:25:10 AM)
Given that we are not scalpwers of FX, this is not a market we will even try to figure out, we will remian patient and wait for a better set-up. Based on this, that is perhaps the best way to frame the reminder of the trading lab - allow me to walk you through what I am seeing in terms of my next trade set-up....it is unlikely to happen while we are here, but it will provide you with some guidelines going forward
David (Sep 14, 2005 11:26:02 AM)
As some of you may know, we follow only 4 pairs, GBP, AUD, NZD and NOK versus the dollar......currently we are keen on trades in NZD and GBP, so let's take a look
David (Sep 14, 2005 11:27:49 AM)
First - look at a 60-min chart of the dollar index (DXC) as it is now, it is testing an upper bear trendchannel at 87.65-67 with a positive stochasitc (coming off a bullish stochastic divergence at 87.35 earlier today - while this bullish, the 60-min trend is still not completely convincing to the upside
David (Sep 14, 2005 11:29:02 AM)
Are we clear up to thid point?
Guest (Sep 14, 2005 11:29:31 AM)
The surge of EUR to 2330 from 8:30 EST, is it a false signal or real breakout?
FXstreet Moderator (Sep 14, 2005 11:30:13 AM)
Ok lets go to live questions
FXstreet Moderator (Sep 14, 2005 11:30:27 AM)
Any questions please post
Guest (Sep 14, 2005 11:30:34 AM)
How important are data releases for intra-day trade planning? How can we avoid surprises?
leo (Sep 14, 2005 11:30:50 AM)
Hi David,what do you think about ichimoku indicator,and where I can get more info about it. Many thanks,Leo.
David (Sep 14, 2005 11:31:07 AM)
To me, this still is not a clearly defined chart set-up, DXC could still break either way, although we still lean towards lower levels
David (Sep 14, 2005 11:32:02 AM)
Leo, not familiar enough with it to provide a well rounded answer - I trust like any indicator, it is but one piece to hep you solve the puzzle
David (Sep 14, 2005 11:33:04 AM)
As I understnad it, it is a good tool for determing support and resstance zones
David (Sep 14, 2005 11:33:43 AM)
Note hoe DXc has pulled back off that upper reistance bear trend line?
David (Sep 14, 2005 11:34:34 AM)
Also note, the daily stochastic on DXC, rolling over, ahead of the 50-day ema at 87.82, another reason we are of the belief that it will trade lower
David (Sep 14, 2005 11:35:18 AM)
So, with this general assessement of DXC from a technical standpoint, we must then determine 2 things:
David (Sep 14, 2005 11:35:35 AM)
1. What will be the catalyst to draw me into a short dollar trade
David (Sep 14, 2005 11:35:49 AM)
2. While FX pair will I use to profit if this occurs?
David (Sep 14, 2005 11:37:25 AM)
The obvious answer to question 1 would be a break of the day low at 87.35 but depending on how prices lpay out, that can change.
David (Sep 14, 2005 11:39:03 AM)
Rarely do trade set-ups remai static, they require monitoring and adjustments, hence following only 4 pairs, allows me to remina on top of all the subtleties that occur
bbarns (Sep 14, 2005 11:40:12 AM)
Can tracking the USDX intraday help make intraday trading decisions? If "yes" then how can it help?
David (Sep 14, 2005 11:41:23 AM)
Absolutely, it is just like a stock trader who uses the S&P or Nadaq futures to determine when to enter and exit stocks. The correlation and inverse coreelation between DXC and FX pairs is quite remarkable, especuially in EUR, GBP, CHF and JPY
David (Sep 14, 2005 11:42:33 AM)
I am not a big fan of intra-day/scalp trading of FX...but that is just my opinion
David (Sep 14, 2005 11:43:01 AM)
So, if we assume that the analysis on DXC is corerect, how will we profit?
David (Sep 14, 2005 11:44:01 AM)
Well, if I am using a 60-min chart as my trigger I need to find a corresponding set-up on the same time frame in one of the pairs I follow - sometimes this does not always yield a trade, however, currently, I like the chart set-up on NZD/USD.
David (Sep 14, 2005 11:47:25 AM)
This morning, there was a bearish stochastic divergence in the midst of that move lower in the dollar (remember NZD and DXc are inversely correlated), while we did not trade on that alone, we do now note that a wave 3 formation was completed on the 7 AM PDT bar. The game plan now, is to wait for a wave 4 completion before looking to establish a long that should extend wave 5 to our price objective (for now) of .7110-20.
David (Sep 14, 2005 11:48:00 AM)
We would expect the pul-back, currently under way to pause and consolidate somewhere in the .7060- 80 region
David (Sep 14, 2005 11:48:18 AM)
At that point we will want to see the following:
David (Sep 14, 2005 11:48:49 AM)
1. A break lower in DXC, perhaps a move below the day lows or someother technical level that develops
David (Sep 14, 2005 11:49:12 AM)
A cross higher in the stochastic for NZD/USD - and a cross lower in DXC
David (Sep 14, 2005 11:50:30 AM)
Everyone folllwing along? Let's take questions, if any, as it related to my trade set-up
David (Sep 14, 2005 11:52:01 AM)
In additrion, the daily chart (stochastic) on NZD is crossed higher - a bullish sign
peperam (Sep 14, 2005 11:52:33 AM)
i see div on the 15 min and will help the pullback on the 1 hr chart to then look for buy on the nzd/usd
David (Sep 14, 2005 11:53:38 AM)
good observation, I do not drop my time frame analysis that low, but the idea you suggest is spot on, it is the blending of multiple time frames and indicators that allows one to reach well thought out trades......nicely done peperam
fixer (Sep 14, 2005 11:57:05 AM)
I understand you look at the DXC, but isn't it more direct to trade on the TA condition of the pair itself?
David (Sep 14, 2005 11:58:07 AM)
I think it is important for me to stress that I treat FX trading (all trading in fact) as a moving target, it is tough for me at this point in time to say - I will do this at this price and do this at that price - the markets make subtle changes that will often force you to adjust price levels etc. I always instruct me clients through the whole trade set-up, that is the only way to fully grasp and learn a method
David (Sep 14, 2005 11:59:35 AM)
Yes, and frankly, the pchart pattern in GBP or EUR etc will likely reflect what DXC is doing anyway, but I find it helpful to monitor and track it - there is a cause and effect relationship with it
kroll (Sep 14, 2005 12:00:48 PM)
What timeframe you apply elliot wave?
David (Sep 14, 2005 12:01:13 PM)
Also note that the level I expect for a wave 4 completion on NZD/USd is also a 50% fib reteracement on the recent move from .7006
David (Sep 14, 2005 12:01:31 PM)
confluence of indicators is important
David (Sep 14, 2005 12:01:48 PM)
I apply it to all the time frames I monitor - 60, 240, daily and weekly
pixie_sa (Sep 14, 2005 12:02:20 PM)
What sort of time frame do you trade ? Daily, Weekly or a longer term trade ?
David (Sep 14, 2005 12:02:23 PM)
correction - a 50% and 38% retracement
David (Sep 14, 2005 12:02:56 PM)
most trades are done based ona 60min chart with anaklysis from the others contributing to that overall decision
David (Sep 14, 2005 12:04:26 PM)
I am also keen on GBP/USD if the 1.8230 levle holds - a move towards 1.8310 is not out of the question if dollar (DXC) resumes its path lower
Eduardo (Sep 14, 2005 12:05:01 PM)
Q: David, what do you like about NZD and NOK? They respond better to your trading methodology? Thanks!
David (Sep 14, 2005 12:05:14 PM)
I will take a few more questions before wrapping it up
David (Sep 14, 2005 12:05:34 PM)
I have chose the pairs I follow based on the following:
David (Sep 14, 2005 12:06:15 PM)
1. Correlation and lack of correaltion to DXC - AUD and NZD, while correlated are not nearly as "jumpy" as GBP - allows me to sleep at night!
David (Sep 14, 2005 12:07:06 PM)
2. My overall profitability - these 4 stood out as ones that I was consistent with when I made the decision to focus only on 4 pairs
David (Sep 14, 2005 12:07:41 PM)
3. And the simple fact that one canot be effective (in my opinion) if you try to follow all the pairs or even the top 10
David (Sep 14, 2005 12:09:20 PM)
I ama firm believer in tape reading and that requires tremendous focus, not possible if you are trying to monitor every pair out there......if you cannot answer instantly if someone were to ask you where a pair is trading, you are not in synch with the price action
David (Sep 14, 2005 12:09:58 PM)
fyi, bull trend-line on GBP/USD at 1.8239
FXstreet Moderator (Sep 14, 2005 12:10:48 PM)
flyswatter77 (Sep 14, 2005 12:11:40 PM)
Dave, is there a free charting site that will alow us to see the DXC index you are referring to?
David (Sep 14, 2005 12:12:54 PM)
not that i am aware of - fx tools that have value will always require some sort of payment :(
David (Sep 14, 2005 12:13:19 PM)
Thanks again for stopping by, I trsut this has been helpful.
David (Sep 14, 2005 12:13:33 PM)
If you have further questions or comments:
David (Sep 14, 2005 12:13:55 PM)
Dave Floyd email@example.com www.aspentrading.com
David (Sep 14, 2005 12:14:10 PM)
David (Sep 14, 2005 12:14:25 PM)
Thanks to Claire at FX Street for organizing this as well
FXstreet Moderator (Sep 14, 2005 12:15:25 PM)
If your question was not answered during the course of this chat, please contact Dave
FXstreet Moderator (Sep 14, 2005 12:15:35 PM)