Finally, pull up a 15-minute chart with no indicators to keep track of background conditions that may affect your intraday performance. Add three lines: one for the opening print and two for the high and low of the trading range that set up in the first 45 to 90 minutes of the session. Watch for price action at…
How does the scalper know when to take profits or cut losses? 5-3-3 Stochastics and a 13-bar, 3-standard deviation (SD) Bollinger Band used in combination with ribbon signals on two-minute charts work well in actively traded markets, like index funds, Dow components, and for other widely held issues like Apple Inc. (AAPL). The best ribbon trades set up when Stochastics…
Place a 5-8-13 simple moving average (SMA) combination on the two-minute chart to identify strong trends that can be bought or sold short on counter swings, as well as to get a warning of impending trend changes that are inevitable in a typical market day. This scalp trading strategy is easy to master. The 5-8-13 ribbon will align, pointing…
Scalpers seek to profit from small market movements, taking advantage of a ticker tape that never stands still. For years, this fast-fingered day-trading crowd relied on Level 2 bid/ask screens to locate buy and sell signals, reading supply and demand imbalances away from the National Best Bid and Offer (NBBO)—the bid/ask price that the average person sees. They would buy when…
One potential answer to capturing a breakout in volatility without having to face the risk of a reversal is to trade exotic options. Exotic options generally have barrier levels and will be profitable or unprofitable based on whether the barrier level is breached. The payout is predetermined and the premium or price of the option is based on…
The most common way to trade news is to look for a period of consolidation or uncertainty ahead of a big number and to trade the breakout on the back of the news. This can be done on both a short-term basis (intraday) or over several days. Let’s look at the chart in Figure 2 as an example. After a…
According to a study by Martin D. D. Evans and Richard K. Lyons published in the Journal of International Money and Finance (2004), the market could still be absorbing or reacting to news releases hours, if not days, after the numbers are released. The study found that the effect on returns generally occurs in the first or…
When trading news, you first have to know which releases are actually expected that week. Second, knowing which data is important is also key. Generally speaking, the most important information relates to changes in interest rates, inflation, and economic growth, like retail sales, manufacturing, and industrial production: 1. Interest rate decisions2. Retail sales3. Inflation (consumer price or…
Figure 1 lists the approximate times (Eastern Time) of the most important economic releases for each of the following countries. These are also the times that players in the forex market pay extra attention to the markets, especially when trading based on news releases. Country Currency Time (EST) U.S. USD 8:30 to 10 a.m. Japan JPY…
With at least eight major currencies available for trading at most currency brokers, there is always a piece of economic data slated for release that forex traders can use to make informed trades. In fact, seven or more pieces of data are released almost every weekday (except holidays) from the eight major most-followed countries. So for those who choose…
