Chapter 13 – Million Dollar Tips

In this section I am going to share with you some of the most important tips that have helped my trading tremendously. I believe just by knowing these tips, your trading could be improved instantly.

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You see, as a computer programmer, I like to solve problems logically. And if you ever looked at any kind of automated trading programs, such as a blackbox solution or an Expert Advisor (EA) for MT4 platform, you’ll notice that any good programmer worth their salt will tend to put a time-filter in their programming, generally used to “avoid” extreme market conditions during news releases, such as a “do not trade” function during 8:25-8:30am EST to avoid US News, or 4:25-4:35am EST for UK News.

However, the idea of time-filter is nonexistent in technical analysis. Sure, we all learned to avoid “extreme market condition”, but by learning to trade the news, we are actually taking advantage instead of avoiding “extreme market condition”.

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What I am going to show you is another form of taking advantage of extreme market condition. They are based on years of observation and logical conclusion. I am sure that once you become aware of these conditions, you’ll be able to benefit from them.

The first tip is what I call the “Lunchtime Reversals”. My theory is, that every bank trader, hedge fund manager, or anyone who manages enough volume that could affect the currency market flow in the short term, takes lunch breaks, especially during the London and New York Sessions, where the New York Session lunchtime coincides with London market close.

These big shot traders, during a regular session, will usually close their positions and take profit just around their respective lunchtime to avoid any surprises, and therefore the market will either stall or reverse. When they come back to lunch, if they see the market start to go the other way, they will change their direction and then re-enter their trade, thus reinforcing the reversal. That’s why if you pay special attention to, let’s say EUR/USD, during a normal everyday trading day you’ll see signs of market reversal just around 7:00am or 11:30am , and depending on the sentiment, market may continue or reverse completely the opposite direction. Therefore, if I am planning a contrarian trade (reversal, going against short-term trend), I will always wait until just before the New York Open (UK Lunch) or around 11:3am EST and enter the trade. However, I would never have entered a contrarian trade if it is not a normal ranging day. I would actually stay in my trade and ride out the slight reversal/stalling during these lunchtime periods, knowing fully well that the market will continue after this minor reversal.

 

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About Kelvin Ching

I'm a professional Forex trader and I have been trading for over 7 years. I was a series 3 broker and a registered CTA with the NFA, the main regulatory agency in the United States, and I have been involved at the highest levels in commodity trading. I also have a background in Information Technology, graphics design, and programming... I'm the co-founder of CurrencyNewsTrading.com, a site dedicated to fundamental analysis and news trading.

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