A not for the faint-hearted FX set-up.

From our ‘live’ skype trade room chats. A couple of 70 per cent add-on tactics that are not for the faint-hearted. And a useful quote from the ‘Dealer’ book.

(Buzz) With a build-up below or above a round number set limit entries at zero, five pips and ten pips. Stop 20 pips. Exit 5 pips below (or above if long). 70% probability he (the author) says.

From the ‘dealer’ book, a tactic with a 70 per cent probability.

(Buzz) The author keeps 1/3 of the trade to take further as required.
That is Cable but applies to all.
What is happening is the ‘dealers’ are going after the stops of those that entered short early with tight stops above.
It’s not our broker – not big enough. It’s the big banks.

Further on the above. It’s not real money that’s doing this. Imagine if you usually traded at the 100 million or higher level. And if you don’t do it too often, say you put a limit order in the system (one that you have no intention of activating) the computers would pick this up and make immediate alterations to the currency effected in anticipation. Once the order is removed as a non-event the market re-corrects.

According to Al Brooks, (since the publication of the ‘Dealer’ book), the market has moved on in size. It now apparently takes more than one bank to move the EUR/USD during London/NY open times. But the principle stays the same despite that.

Another comment from the ‘Dealers’ book)……In order to reach this pot of gold, you have to be able to find an approach that accurately trades market corrections rather than predicts them, since technical and fundamental analysis are simply not enough to beat the crowd. The secret to success is actually not such a big secret. Everyone knows that with proper money management and a half-decent strategy you can make money. Yet most still find themselves failing. To become truly successful, if you are a beginning trader you should immerse yourself completely (and I mean completely) in the subject in order to find your edge. If you are already a winning trader, then you had better make sure that you understand exactly what your edge is. What is it that sets you apart from the other 90 % of traders? Is it sheer luck or something different? Knowing what keeps you in the game is the only way to find your way back during tough times. In the end, no one can ever hope to master the FX market; but for those that manage to set the dollar signs apart and focus on the intellectual enjoyment trading provides them, a fortune usually lies along the way!

Silvani, Agustin. Beat the Forex Dealer (Wiley Trading) (pp. 146-148). Wiley. Kindle Edition.

(Nick) A lot to take in there, going to have to read all this a few times, but some fantastic ideas on first read through. (Referring to the above and several items not included).

The round number strategy again. This time Cable. Only works if the build-up is an extension. I’d be aware of a build-up any closer to the round number.

Round number tactic, GBP/USD.

Exciting add on strategy for backtesting. It’s from the ‘Dealer’ book in this instance short at a test of the ten ema. Price action up to that point is critical. In this instance three engulfed bars. Also, as now with all my trades, the trend must be affirmed — exit on the first close above the ten ema. 50 pips.

Aggressive add on to our strategy with a test of the ten ema.

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