Sometimes, during extreme market condition, traders will skip lunch and just keep on pushing the market, and that is another sign of staying away from entering a reversal trade.
So, if you see a reversal around London and New York Lunchtime, maybe it’s sign to either take your profits or to enter a new trade.
The second tip, which also helped me to make a lot of money, is what I called the “Stock Market Jitter”. Exactly 30~45 minutes before equity market open, 3:00am for London and 9:30am for New York, you’ll see some extreme market movement, usually in the form of a reversal… This is the exact time to enter the market because right after Equity Market opens, currency market will usually go back to the pre-equity market open levels.
I have seen this kind of market movement again and again. I have learned to hold on to my trade and not to get scared out of a profitable position during equity market open, or to plan my entry just around this particularly volatile time. Usually you want to go with market trend and wait for reversal at this time for a much better entry, but I have also learned to pick up quick pips taking a reverse position in this short 30~45 minutes. My best trade was a 80 pips reversal with GBP/JPY around this time. You’ve got to master this tip!
You see, by knowing what to expect from these normal market events, you can add 20~30 pips extra to every single trade that you take. Lord knows how much profit I was scared out of during these times when market suddenly reversed before I learned this simple fact. And no one will tell you about these little nuances in trading UNLESS they are active traders.
Another important tip is to concentrate on the currency pair that has the most potential to move TODAY. If we have news scheduled for Sterling today, then our focus should be on all GBP related pairs, such as GBP/USD, GBP/JPY, or even EUR/GBP. I usually will stay away from other currency pairs today because I don’t want to spread my attention too thin and end up with losing trades.
As a general rule, and a great tip, is to concentrate on just a few currency pairs. Do not trade too many different pairs and constantly worrying that you’ll miss a good move. Like I said before, most professional traders concentrate only on ONE currency pair, EUR/USD, which also has the most liquidity in the entire Forex Market.
The only reason that I was able to put 2 and 2 together with my “Stock Market Jitter” and “Lunchtime Reversals” is because I was only concentrating on a few currency pairs, namely the EUR/USD, GBP/USD, GBP/JPY, and either AUD/USD or USD/CAD if either one have news pending.
If you would go back and re-read Chapter 12 where I talked about how to put everything together, you’ll see that my focus in trading and my selection of currency pair to trade is based on the news release scheduled for that day. Make this a routine into your trading and chasing around and buying/selling every currency pair under the sun, you’ll thank me later.