Make money trading Etoro

UK elections FR

Tuesday, March 15, 2011

Trend for 15th March 2011

Yesterday I wrote about the impact that the tragedy in Japan had in Japanese yen pairs. Yen fell across the board. However, if you looked at the charts today you would see that the trend reversed today. My experience shows that various geopolitical, geographical, natural or any other data (even macroeconomic) usually has very short impact on the market. They usually create a short term trend, most often just one day move. And very often after these huge move days we have a reversal. You can clearly see it on Fridays, when there are big fundamentally driven moves in the markets and on Monday markets come back to their previous levels. 

I even have a strategy for that which is called ‘crazy Fridays=blue Mondays’. If there is a rally on Friday I usually place a reversal trade on Monday, during European session (placing a limit order) and in most cases I am a winner, because market comes back where it came from on Friday. The best part about the strategy is that you can play it not only on Fridays and Mondays, but very often any day after a big move in the markets (provided it is not a day when a mega trend starts). I use a two point rule for entering the market. I place an order under the current price (if the price is expected to go down) and an order above the current price (if the price is expected to go up) and wait for the level to be broken. 

If the reversal does happen my limit order is opened and I go with the market till it exhausts itself. So, today was a perfect day for that. You could have traded all Japanese yen pairs when they reversed. Below is the example of gbp/jpy pair and instructions on how you could have traded a trend in it. See you tomorrow.



You are at a blog:

Trend


My previous posts:


Trend trading