A few days ago I wrote about how financial markets often get really quiet over the summer, especially during August when many market participants are away on holiday. Then as September gets underway, there are often some big moves which start a major multi-month direction.
As some of you have probably noticed by now, the question as to whether the FOMC will raise the U.S. interest rate again at its next meeting on 21st September – which is next week – is taking center stage in Forex market commentary.
When I first started trading back in the days of the early boom in retail Forex, the Euro – especially the EUR/USD currency pair – was a quite different beast to what it is today.
Last night I was reading a thread on a well-known Forex forum that was written by a guy who had developed his own Forex trend trading strategy. I got the feeling that he was a young and relatively inexperienced trader, but as rigid systems go, he had come up with a pretty good system and a good attitude. I wish him every success.
I was thinking this morning that it is easy enough to trade with the trend, but what about the times when there are no trends, or when everything is moving against the prevailing trend? Easy enough in the sense, by the way, that you can have some measurement to define a trend that is fairly simple to define and follow and that works over time.
The best way to learn how to trade Forex is by looking at real-life examples from the market, so while last Friday is still fresh in our minds, it is worth taking a look at what happened and to relate that to what I wrote in my last posting.
It’s the first day of the month today, and not just any old month, but an important month: September. Why is September important? Because during August a lot of bank and hedge fund staff are on holiday and volumes and directional movements in the market are usually thin. The 1st of September is the day that almost everyone is back at their desks after the summer (in the northern hemisphere!) holiday and its back to business as usual. For this and additional reasons, we can expect more excitement and opportunity to make money in the market after a fairly quiet August to begin now.
Today I’m going to follow on from yesterday’s post where I talked about how I decide at the start of each day which pair I am going to trade and in which direction. I wrote that I had decided to try to trade GBP/USD short so I’m going to show you how that worked and how I approached it.