Trade Diary For the week 27th June 2016 l Updates of Usd/cad

Friday I update the blog about the setup in usd/cad and risk of only 30 pips, brought another test of 1.3086 supply and now I am taking profits around 1.3050 area, and would look for the strength, If price test the area again and would like to see the approach.

Take a look at the post Usd/cad Long

We all know about risk in Currency trading, which drives the market broader way, but only few of them offer opportunities such as this and When it start to test important areas with strength, then it always do offer such low risk trading opportunities, which is well worth to try and make them work for you.

Updated chart of Loonie

Trading is all about managing your risk Building Risk management strategies

Trading any market can be a challenge, and it often test the versatility of a trader but IF you have built up strategies that can help you understand lack of involvement or not too much liquidity or volume behind the moves, then you certainly can ignore various global risks that drives the market sentiment for longer period and that is what happen after "Brexit",Vote where "leave" camp dominates the voting launchpad,but I seriously never expect that much response to those results.

Bring simplicity to the trading and manage your risk properly

I expect the recent failure to close above strong supply is probably is last step towards eating up the remaining sell orders that has been left filled while price makes a large move down and it was the only supply in that range so to react with strongly bullish move price had to react and that is exactly what happened and now after this supply is consumed we can see move towards the earlier high above that 1.3115 area while price left this area and Now because of the low has been tested with even strong demand we can see new buying interest that make a new high above that and that could prove out to be very substantial move as Next area to watch is 1.3279.

Best way to manage any trade

There are numerous trading opportunities available on the table daily and you lookout for high probability trade and after you find one such trade, the next thing you do is to look manage your trade and manage the risk properly. There are not too many traders around who have used Money management as there prime tool to tackle the market and as in result high probability trades turn out to be a losing one.Have you ever try to add new position to your existing profitable one, specially when you trade in strong trending conditions and you think market has offered one pullback and good area to enter the market to make more profit.

Logical way to add another position to your profitable one

IF yes, then how would you mange that trade itself,as I often use to add another position If earlier position has given me 2 times of profit what I use to risk when I enter initially, so that means risking only 1 part of your profit to make more. e.g If you risk one part of your profit to enter at pullback and put the stops at your initial entry and IF in any case you stops get hit, you close that trade at breakeven, but this is the best way to manage your trade of making complete use of your trading plan and logical way to enter and exit the market.

Scaling out your position

Another way to manage your trade is to use "scaling out", which means that you reduce your position size as compare to what you enter initially, but it is not a good idea because it can totally take potential profit as you won't allow so many trending conditions daily and hence make full use when you are given a chance. "Scaling Out" is not a good idea because IF you enter with 2 lots and price moves 100 pips in your favor and you close that trade and again enter with 1 lot with the same stop at the price of your first entry, This seems illogical way to as you there is big chances that market went in your favor (specially when market is trending strongly),another 100 pips and you make much less that your first anticipate and this skills are must to have, If you want to use Money management to cope up with your directional bias.

Foerx Strategies-Fibonacci Retracement l Guide to trade fibonacci retracements and expansions

In this section, I will explain How to use Fibonacci with combination of RSI to improve you trading results and trade trends most of the time as Fibonacci is a handy tool that let you know when to enter the market and use accurately over time by some legends and further improvement of this method has been seen.

Tools you need to use with Fibonacci Retracements method

Fibonacci is the most widely used term and every Forex trader new or experience is familiar with the term. Fibonacci is the tool that really can help you find true trends, pullbacks or Retracement and signal continuation of the larger trend.

Fibonacci retracement and expansions are the handy tool for entry and targets

We have seen people use fibonacci in elliott wave, harmonic trading and chart patterns for intraday and swing trading. But you need to have complete knowledge of swings on higher time frames as mostly fibonacci is used for reversal and one can really chase the trade too far If one has not experienced enough to know about Risk management and trading mechanical systems.

Here you see 5 minute chart of nzd dollar where price is strongly in uptrend after retracing and you just need to put RSI of (14 period) and it should be above 50 which is neutrality period for traders and look for 5 minute chart and find a swing that is atleast 40 pips and mark this area as A, and Now you just need to find out If price retrace to 61.8% fibonacci and mark this area as point B,and If price rejects from there and close above 78.6% fibonacci which is point C which is our entry price and don't remember to put your stops and it should be place just few pips below 23.6% and in this case Entry price was at 0.7149 and stops were placed just below 0.7116 risking just 33 pips and there is another rule for your target.

It clearly upto you If you look to go 1:3 risk reward or whatever ratio you like, but If you want to stay in the trend for longer periods the You just need to find another strong swings of 40 pips and when you find and price start to retrace to 61.8% fibo and rejects from there you can simply put your stops just few pips below 23.6% and hence locking the initial profit and look to do the same and this is such a powerful system that If trend is too strong you would ride that trend for 2-3 days with risking not too many and locking your risk just on the day you enter.

Power of fibonacci trading Updated Chart nzd/usd

Our initial entry was around 0.7148 and stop was placed around 0.7115 so we risk 33 pips to get atleast same amount of pips in our favor.

We were given second entry at 0.7172 and then we luckily get our stops around 0.7148 which was our first entry price and that give us confidence of smart money involvement and levels at 5 minute chart.

Third entry was offered around 0.7232 and that time our stop and trailing stop is around 0.7217 and here we can look to book profits or can risk what we afford to risk earlier which was 32 pips and because of the fact swings are so strong it is risk well worth taking and see if we can take four time reward which is very rare on intraday trading chart.

If you would have risked 32 pips initially and set to breakeven at first swing at 0.7148, and now you can look to trail your profits around 0.7217 and trade the trend If you can risk 32 pips more to gain more otherwise you would have already got 100 pips target which is 1:3 risk reward and that is forex money management is all about and you just can't just let an entry go buy when you look to ride most of the trend.

Let's repeat the entry and exit system once again.

1. You should look for strong trends where Daily RSI should be in positive slope up or down.

2. look for 5 minute chart and look for strong spike of 40-45 pips in the direction of daily trend.

3. look for first retracement to 61.8% and then look for price to close above 78.6% fibonacci and put the stops few pips below 23.6%.

4. Exit only when you find a strong spike simply retraced below 23.6%. IF you get second swing similar to first one and that repeat the clause look to set price at breakeven .

5. When you get Third entry as I show in the above chart then you can look to book partial or full profit as you should not show greed and profit is alteast 1:3 when you enter first.

Currency Outlook For the week June 20th l Trading Brexit Referendum

It has been really quite a rally since I posted the chart of gbp/usd and it has manage to engulf the decision point and supply above around the 1.4750-60 area is not far away and If price manage to react from here and ignore this decision point completely then you can certainly look out for longs around the 1.4650 area, if price tests this area with purpose. Chart below is prime example that only price decide whether there is supply or demand and when it approaches and rally is too strong, we should be aware of such price patterns that don't care strong levels but look for reaction only when price manage to test when there is no subsequent demand or supply area left on the opposite side.

Alternative scenario of Gbp/usd if bias turns bullish from here

This scenario was not favored at all but we have to respect the sentiment and if Brexit referendum failed to reach any decision and Britain manage to stay in Eurozone (Which I think is the best outcome for global market), then pound sentiment will again turn strongly bullish but volatility will remain subdued and price will rally for sure. Just another thought process and waiting game to see how price behave at new high or higher low If demand remain protected.

Fear of Brexit driving Pound into extreme levels of trading

We all have seen another volatile week for gbp/usd, reason being the news out of Britain Area regarding "Brexit" driving traders in fear of missing piece of puzzles, and hence some strong buy and sell orders but for me, its always been discipline and most crucial traded levels of rejection and one I have my eye on right now is crucial 1.4650 area, and that has been the point of focus for me right now .

Pound overall picture from Technical point of View

We have seen some strong rejection from highest levels and this can be another fakeout of demand and If we see some rejection in the box above in blue we can see massive selling at failure at supply levels, but we have to be patience and we have to wait for the sellers take position again from these levels as we have flipped again into the confluence of previous bull rally and rally to 1.4320 area, seems bulls hold the position again or we can see another phase of distribution around the levels I mention in the chart.

Focus has been shift to the two volatile events in the coming days and one of them is this week FOMC minutes, which has been the driver of US dollar Index Future at large and any statement made or failed to reach the set targets of inflation or employment numbers will give USD bears enough chance to drive the price lower and this can be once again the most favored scenario, but we will have to wait for the board members to justify their reason to hike or not to hike and this can really be volatile if there is no proof of another hike in coming months as employment numbers were very disappointed this month.

Currency Updates Buy Euro on Dips

It has been volatile week for Yen Crosses and fair risk after comments from Yen officials that they don't need further stimulus and happy with the recent recovery and these comments seen decent Yen appreciation, but focus is now shift on next week big Brexit referendum which will decide the fate of Britain residents, that whether they want to stay in Europe or would like to exit and that can really create panic and moves can go either way, so be patient and wait the storm to settle and it would be better If you don't schedule any trading activity during the next week because of uncertainty.

How to Trade Forex mean Reversals with logic and Reward