My technics
Interpreting the GDP report: How to make sense of the numbers.
Interpreting the GDP report: How to make sense of the numbers.
If you trade forex, you already know that the GDP report is one of the most appreciated pieces of information in the marketplace. It is comprehensive, provides a picture of national economic activity on a meaningful time frame, and has important implications for such variables as the unemployment rate, central bank rates, and inflation. We do not pretend that the small space of this page will allow us the chance to make a detailed exposition on the subject, but we do aim to present a few salient points of the report as they relate to trading decisions, and market trends.
The GDP report provides a snapshot of all economic activity that take place inside the borders of a nation. Any economic activity that in some way leads to the production of goods or services is included in the report. If a foreign firm employs workers in the U.S., for example, the products created by U.S. workers will be accounted for in the report. On the other hand, if an American firm operates one hundred factories outside in Mexico, and generates billions of dollars in income from its activities there, none of it will be made a part of the GDP report, since no production takes place inside the national borders.
The GDP report is not generally regarded as a forward-looking indicator, and indeed, few of the information contained in it has a great degree of relevance for the future dynamism of the economy. On the other hand, no one has a crystal ball that can show the future, so central bank authorities include the information presented by this report in their evaluation of inflationary pressures. In particular the GDP deflator is an important piece of data that tells us how much price pressure is generated by domestic production. It differs from the CPI in that it does not account for import prices. By looking at this indicator, economists can isolate the domestic portion of the inflation spectrum, which can then help them decide the impact of currency fluctuations on price rises at home.
The GDP report accounts for all production in a country, but it only calculates the values of final goods. In other words, the report does not calculate the number and dollar value of tires, car motors, but only measures the dollar value of automobiles created by domestic industries. As a result, it provides a compact, yet detailed overview of national economic activity.
The GDP report is one of many economic indicators, and it must be taken in the context of other indicators that contribute to the big picture as it exists in reality and in the minds of traders. By familiarizing yourself with the GDP number and its details you may gain a significant edge over traders who are ignorant of its meaning and significance. This particular indicator is relatively straightforward, and if you are a trader, there is no justification for not studying and comprehending it to the maximum extent possible.
Breakout trading GBP/JPY
I wanna post here my very simple technic of breaout trading on GBP/JPY. First You should know about trading the cross pair like GBP/JPY is
GBP/USD x USD/JPY = GBP/JPY
so should also look at GBP/USD and USD/JPY. If You want to buy GBP/JPY, you should see strong GBP and a week JPY so GBP/USD should go up and USD/JPY shluod go up then GBP/JPY has to go up a lot.
Let’s talk about system. I trade on 15 minutes chart but i’m using also 30minutes and hourly ploted on my 15 min chart. Also i’m using 4h chart to look for support resistance such as fibs and weelky, montly pivots, highs/lows.
Download indycators from here. Unzip them and put to C:/Program Files/Meta Trader/expert/indycators/. Also You can download from here my template, put it to C:/Program Files/Meta Trader/templates/. Reboot Your trading platform. I’m using FXDD Mt4, platform timing is very important.
Rules to open short position. Reverse it to long trades.
A.Oportunity
1.Start from 4h chart and look for posible support (weekly and montly pivot, big fibs), where the price can reverse and hit Your SL. Avoiding false breakout.
2.Also remended is trading with the main trend on daily and 4h chart.
3.Repeat this process to 15m chart, use daily pivots.
B.Setup
1.QQE(5) crossed to dwonside as You can see below.
2.Price below 5 days SMA and 100 hourly SMA. I’m using an indycator to plot in on m15 chart.
3.SMA 5 and SMA 13 crosed to dwonside 30m chart.
4.If You use the same SL example 30 pips think about TP shoud be minimum of 30 pips. The bigger it is the better(TP/SL)
C.Trade
1.Bar CLOSED below the box
Aditional rules:
1. Always use stop loss
2. If You can’t stay on Your winning trades split it. So You close first half at example +50 pips and drag the second half to example cross the blue line with the price.
P.S. There a lot of stuff that You should know and i don’t wanna post it here for now. If You have any questions post in comment.
The best stop loss with fibonacci trading
Stop Loss
Forex is a highly volatile market. he exchange rate can move 150 points or more in a matter of minutes, especially if there is major announcement or central bank intervention. For example, when Alan Greenspan made a comment and around the same tme the Japanese Government intervened in the market, the affected currencies moved significantly.
One must use a mental stop loss or enter a stop loss or risk losing most or of one’s capital. Immediately entering the “market at order”, a stop loss must be placed. It is a pre-calculated price where you plan to exit the trade if the market moves against you. It forces you to folow an exit strategy getng you out of the market at around the nominated exit price. If possible, it is wise to place the stop loss just above or below a resistance or support line.
A stop loss should never exceed your maximum exposure amounts. One should never increase your stop oss after you have entered a trade and established your stop price.
RISK TO REWARD RAIOS are important and should be calculated.
A risk reward ratio of 1:1.5 is recommended.
Risk. 30 pips to make a profit of 45 pips or risk 40 pips to make 60 pips.
The best location for placing stops is:
15 pips above the last swing high for a SHORT trade and
10 pips below the last swing low for a LONG trade.
An alternative place for a stop loss would be just past the next Fibonacci level, e .g buy at 61.8% retracement and place the stop loss below 78.6% retracement.
It is stl important to apply the above calculations for your risk/reward. If stops exceed the risk/reward calculations, seriously consider not entering the trade.
Moving Stops
It is important to protect your profit. One way is to use a moving stop loss. When the trade becomes profitable, you move the stop loss to reduce your risk.
If the Stop Loss is 40 pips with 1:1.5 risk reward ratio, you are risking 40pips to make 60pips profit.
• When the market moves 10 pips in your favour, move the Stop Loss 10 pips. Your Stop Loss wil now be reduced to 30 pips.
• Continue reducing the stop loss each tme the market moves another 10 pips in your favour. Your stop can eventually be moved to your entry point and give you a “free” trade.
• When the market reaches 75% of your original target for profit, begin progressively tghtening the distance of your stop from the current market price.
• If there is no sign of a market reversal, take off your lmit order and continue to use the moving stop technique to protect profits and ride the trend.
• If there is strong evidence of a market reversal, close your posion with a market order and consider opening a new posion going in the new direction. You wil need plenty of practice to do this lve. We know that after a big rally there is always a consoldation which is basically a retracement to a Fibonacci level.
You need to have a stop that does not folow the market too closely. The noise or whipsaw in the market can be 20 – 30 pips or more and wil take out stops that are too small. It is suggested that stops should be at least 30 to 40 points in most cases, especially in the early part of a trade. However, the best posion for stops is above and below points of resistance or support as mentioned above.