Why Trading the News is Probably a Bad Choice

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You might have noticed that I don’t post much about the news like other forex blogs. I don’t bother with what the next interest rate would be or the quantitative easing of currencies. I realized that if you depend so much in the news, you’ll end up confused.

Don’t get me wrong, there are a couple of people who trade solely on the news, and its a strategy that I never got the hang of. Its fun to see your account go up the moment the news was released, and provided you’re on the right direction, it can provide so much high. And I think I understand why some people would depend so much on the strategy. Its fun!

But in my experience in messing around with the news as a forex trading strategy, while waiting for the news to come out, like for example, the interest rates. Its hard for an ordinary person to predict what would be the interest rate. Even experts can’t be so accurate to predict it, so that leaves me “guessing” what will be the interest rate. And with time pressure on your side before the news broke out, its just a matter of guessing now. With 50% chance of going wrong, you’ll eventually go break even or go bankrupt. And with stress as its effect, I don’t think I would last much with this strategy.

I don’t know, some people may make a killing out of it, I see a lot of people depending on news for their trading and investing decisions. I see a lot of this in stocks and currencies particularly.

What about you? Do you trade with the news? How was it?

USDJPY Forex Trade Update: Up by 17%

I am now heavily invested into USDJPY. With 4 positions on the pair, I always look out for the nearest resistance to place my stop loss. You don’t want to lose too much when the trend suddenly reverses. Play defensive as one might say.

But it seems pretty good trade so far. I almost got all the bottoms and I’m waiting for the real trend to begin. Capital is up by 17% as of this writing.

By the way, there’s a new forex trading lesson out now. Its worth reading.

Closed: +35% USDJPY

Closed trade on USDJPY giving us with 35% boost in capital. Its a great trade and the reason I closed is because of the strong resistance. Also, there’s a doji that formed this morning. I don’t want to risk the profit if all the indicators are telling me its still uncertain.

As a rule of thumb for me when trading forex, I get out when I am confused. As of this moment, USDJPY is in a confusion as both buyers and sellers don’t know where to go. As proof, a doji formed. I’d rather be on the sidelines or open a position on the sell side since its a lot closer to a resistance line. But that’s just me.

Forex Trading CAD/JPY and Forecast

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I’ve been following CAD/JPY for a while because I was waiting for the breakout. There was a confirmation of this about to happen in the daily chart. I’m in this trade right now and currently at +61pips.

Why did I choose bear?

The red “cloud” you see on the chart is a resistance. The reversal pattern and the cloud plus the green and red line all indicates a bearish flag. This is a high probability trade and we may see some consolidation tomorrow by making a new low then pulling back, then breaking all the way down. If you’re going to get in this trade now, just make sure to put your stop loss.

The iPad 2 That Forex Trading Bought

From my very good trade on EURCHF and achieving my First Forex Goal, came the reward, an iPad 2.

I just got it this morning, just after I woke up.

A very handy tool for forex trading. I can trade virtually on any position while lying on the couch.

There should be another round of reward when I reach my 2nd forex trading goal. I still have no idea what kind of reward. What do you think should I reward myself with when I reach my 2nd trading goal? Leave your comments below….

Trading EURUSD & GBPJPY – Big Bluff

I personally think that the EURUSD and GBPJPY’s uptrend is one big bluff. Look at what happened when the news went out for EURO. The situation there is terrible. Just one news and down it goes for more than 200 pips in a few hours. I think the GBP will be next. Will it go up? Sure, but I think it is short lived and just a bluff.

I’ll still continue to wait for GBPJPY or find ways to add position on EURUSD. I think the short term traders may have made the pairs too overbought. But its a good opportunity for most of us to make money out of it.

Week 33: EURCHF Consolidating

EURCHF is playing hard to get and is still consolidating. We might still have more consolidation for the next week. But if you are in this trade in LONG Position and it did move up, expect a great reward from this. After all, our stop loss is just at 1.200 which have a low risk with great rewards. On previous post, if you have entered the trade, you have around 10 – 12 pips of stop loss and we are looking at our first target if this breaks out at 120 – 150 pips. That’s x10 reward right there as our first target. We are actually buying at bottoms here.

Its time to test those patience. EUR/USD is looking very good on the short side though. But I wouldn’t enter personally at this time.. The stop loss would be too much of a risk for me. I’d like to be on top, being a contrarian trader. EUR/CHF is a better pair for us to trade at the moment.

While in consolidation, protect your money. You don’t want to lose money at this time because after consolidation you know what happen… A breakout. You want to be on the sidelines or hold any position so you can survive the whip saw of the price until you earn a payday on the breakout. Its time to practice patience guys.

Of course, all this is for educational purposes only. Trade at your own risk. 🙂

Week 30: Sliding with USDJPY


USD/JPY Weekly

Seems like USD/JPY is forming a pullback from the past week of bull run. Looking for the red lines as support/resistance and targets.

USD/JPY Daily

I’m currently SHORT on USD/JPY and is already 14% up in green. Red lines are strong resistances/support. Could take a couple of more days before we hit our target 80.600.

USD/JPY 4 Hour

Strong support at 82.000. Resistance 82.65 if pulls back.

Comments on other Pairs

I’m currently on the sidelines for the other pairs. My watchlist includes, AUD/CAD, EUR/USD, EUR/CHF. Though, they made a clear price action before, the chart, for me, is not very favorable now and I would prefer to wait until a more clear price action appears. In the meantime, I’ll focus my forex trading on USD/JPY.

Forex Trading as Hedging Strategy

Forex trading is one of those instruments that are very flexible on what you want to do with it. It can be a wealth accumulator, a protection or a hedge. Hedging is a strategy by investors in which they “bet” on a currency in which they think will do good, while being invested in other things that will go bad.

Let me give you an example, Oil companies consistently hedge their oil. Since they buy a lot of oil as inventory, a lot of oil, not bought in the market will result in losses as time goes by. Because of regulation, unpredictability of the market and such.. So what these company does, is “hedge” oil, which means, they take a “SELL” position on the market, such that, either way the market goes, they never lose money. They may lose money on the physical oil inventory, but they will gain money from the SHORT positions in the market.

Forex Trading as Hedging for Stocks

I will give you a personal example. Lately, I have been investing in stocks. Not just local, but also international. And the War in the middle east has been on the news lately. Its not just news, but they actually affect the economies of countries affected by the war. That includes the US. Since I am invested in the US. What can I do to protect myself from this unpredictability? So I hedge the EURUSD. I know that allowing refugees inside Europe is a bad decision. So I bet SHORT on that currency pair… And, months later, proved to be right. As seen in my position for the pair. eurusd-isisSo now I’m in a very good position currently at 803 pips in profit.. If the companies I hold in the US are affected by the instability of EUROPE, then I will still make money from my forex trading because its a hedge from my US investments.

Philippine Stocks Hedging Dollars

I also started investing in Philippine stocks. But we all know that the current president is not that business savvy. Before he sat on the presidential seat I already thought of him as a man of the people than a business/economic president. And will do anything to prioritise the people than businesses. Which means, comes a time, it might NOT be good for the stocks I hold. Or it could be that the PSE stocks is just that overhyped. But what ever the reason is, I am afraid of it going down. In which it is currently happening.

Philippine stocks is at a downward fall.

Philippine stocks is at a downward fall.

Knowing that, I immediately went to my bank and exchanged my PESO to DOLLAR, just before the new President elect take office. That was the hedge. Since I fear that the stocks would drop, the hedge would be — buying dollars hoping that $ would do better than Peso. And months later, I am again proved to be right. I bought dollars at P45.00 and it is now currently trading at P49.92. A 500 pip profit as of this moment.

While USDPHP is going up.

While USDPHP is going up.

This is not about telling you people that I am right all the time. This blog has been a journal from the beginning. And this is just my way of explaining to you how you can make use of forex trading as a protection of your money. Remember that rule #1 is to not lose money..

So when you start making money out of your forex trading, you should also think about protecting what you have gained. And that is where hedging comes in.

Total Earnings in PIPS 800 + 500 = 1,300 pips

I hope you learned something of value from this post. If you want a primer on how to trade forex, you can read this page for a short course on forex trading.

Or if you’re looking for a reliable broker, visit the forex brokers page or try out brokers that accepts paypal.

Week 19: Money Management as Investing, Forex Trading as Professional Gambling

Taking advantage of the EURO Zone Debt Crisis.

Do you know what makes great professional poker players great? Its their money management. The reason why there are few great poker players and a lot of people just gambling using luck is because great poker players know how to use money management.

They know the probabilities of each card they are dealt. They don’t try to push their luck even with a bad card hoping that their competition has worse. In forex trading, try to make wait for the right moment to open position, rather than trying your luck just because you want to open a position. The downfall of most forex traders is that they tend to over trade. They want to open a position just for the sake of opening a position. This is detrimental to a good trading strategy, whatever the strategy is.

Money management, i believe, is the best part and makes the most part of a forex trading strategy. Systems for entry and exit like fibonacci, technical analysis and whatnot are just the small portion. A poker player does the same thing, to survive the table, he must manage the money if there comes a time when he suffers consistent losses. Trading is the same way, you must survive consistent losses until the next big trend comes where you can make back your losses and then some.