Archive for January, 2012

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Forex Scalping on NFP Friday

Friday, January 6th, 2012

Today was another day of the market moving down, down, down. On top of that, we had a very significant news announcement – the Non-Farm Payroll report.

 

*** EURUSD MARKET STRUCTURE ***

Decision Point

EURUSD Market Structure

 

The EU had clearly done another sell during the European session. Price was approaching a strong decision point. Which way would price go today?

I could predict, but with the Logical Forex Indicators – I don’t need to.

 

*** EURUSD SELL ***

Magnet Line Dance

EURUSD Sell

 

Let’s look at the Indicators:

  • Logical Forex Activity Lines – Not surprisingly, they are incredibly wide – indicating tremendous amounts of liquidity in the market.
  • Logical Forex News Alert – as you can see, the New Alert Indicator kept us from trading during the critical part of the news announcement.
  • Logical Forex Flow Lines – After a very pronounced sell, price consolidated a bit and then started its’ descent down again.
  • Logical Forex Phase – Tracking along nicely with price. No apparent divergence.
  • Logical Forex Bias – Starting to again support the southward direction of price. As the move was quite quick, it is just starting to tip down again.
  • Logical Forex Magnet Lines – Notice how price plowed through the Magnet Line the first time. Since there was no Dance, I needed to be patient upon entering the trade, or expect a pullback – which is exactly what occurred. That’s why it is always the safest trade to wait for the Dance to occur. Also, note how the thick black Spine was not fully revealed until the second push on the Magnet Line. As soon as price exceeded the first push beyond (which is when my broker quote panel started to really ‘tell’ me what was happening next) it was time to hit the sell button.

 

*** EURUSD EXIT ***

EURUSD Exit

 

This was a rather quick trade. Especially in such a volatile market, I really do only like being exposed for mere minutes. I exited as soon as price started to slow, then pull back on the broker quote panel. I cannot mention this enough – you cannot watch the chart and wait for price to show its’ pull back or hesitation. You need to watch what your broker quote panel does. That is the ONLY reality from just prior to entering a trade all the way until you exit the trade.

In this case, I was happy with my handful of pips with large lot sizes. In and out quickly, whenever price goes against me.

Happy trading!

-Scott

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Liquidity Returns for Forex Scalping

Wednesday, January 4th, 2012

What a difference a few days makes when it comes to the readiness of the market to offer up pips. Just by looking at the Logical Forex Activity Lines, it is so apparent how much more activity – and liquidity – there is in the market.

Ok, so that means it’s time to identify some trades…

 

*** EURUSD MARKET STRUCTURE ***

Structure, Scalping

EURUSD Market Structure - Big Move Down

 

As is evidenced by looking at the market structure, there sure was A LOT of downward movement during the European session. After such a pronounced move, my initial impression was that the highest probability trade would likely be on the buy side. However, I am not going to predict here. I am going to let the market tell me what it wants to do.

Price was interacting at a prime spot – right around a Logical Forex Magnet Line.

Which way, market, which way?

 

*** EURUSD SELL ***

Dance, Scalping

EURUSD Sell Trade

 

Let’s look at the Indicators:

  • Logical Forex Activity Lines – Enough activity to warrant a further look.
  • Logical Forex Flow Lines – Price started a move down, then hesitated (notice the stacking yellow?) then started to continue down some more. It is clear that price, at least at the moment, is going down. The black spine is fully revealed.
  • Logical Forex Phase – Tracking nicely with price. Nothing to cause any alarm.
  • Logical Forex Bias – Supporting the southward direction of price.
  • Logical Forex Magnet Lines – A nice, super-tight Magnet Line Dance right on the line. Notice how, after the slight pullback, price was ready to do its’ thing.

This trade was entered around the arrow, just as it had gone through the Magnet Line.

 

*** EURUSD EXIT ***

Scalp Exit

EURUSD Exit

 

Price took off quickly. As it approached the next Magnet Line, I was ready to exit with even the slightest hint that price was bouncing back. As is often the case (just check prior blog posts) price went through the next Magnet Line. I was then expecting a pullback to that line and would have exited had it pulled back beyond the Magnet Line. Luckily, it continued a bit further down, and you can see the exit around the green arrow.

Now, you can also see that price continued on for quite a bit more pippage. Of course, it’s easy to look at the chart post-mortem and wonder why I left so much money on the table. The honest answer is that when you are in a trade, you don’t know what is going to happen. Yes, I could have held on and captured more pips. I could have also just as easily ended up with a break-even or – worse – a losing trade. All pips are good pips. All profit is good. Large lot trades are awesome. Compounding is my friend.

Happy trading!

-Scott

 

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