- Saw the pattern of a bullish USDJPY trading gradually higher in successive trading ranges
- Bought the 109.64 09:00 binary option for $9.50 at 08:00 just before the dip below the trading range
- Was thinking after it dipped I should have waited for the MACD trap and bought it cheaper or bought a slightly lower strike for the same price
- Turned out the MACD trap was set much earlier (see arrow) so that thinking was not right
- Got the pop I was looking (USDJPY moving to a new higher trading range) and closed the trade at $92.50
- Could easily have waited for $100 (another 10 minutes) but my emotions overtook me (still working on that)
Here is how the chart played out:
If you would like a word doc with the details of the trade step by step send me an email at email@example.com
I listened to a YouTube video that said the high frequency traders fool the retail traders by “gaming” the MACD. I found this interesting and decided to look into it.
MACD stands for Moving Average Convergence Divergence.
The typical retail trader uses MACD to get “signals” and has little or no idea what the MACD actually is or does.
Here is what makes up the MACD signal:
- The MACD LINE
- this is the difference between two exponential moving averages (emas); the default emas are 12 and 26
- The SIGNAL LINE
- This is a 9 period simple moving average of the MACD line
Here is how it works:
- BUY when the MACD LINE goes above the SIGNAL LINE
- SELL when the MACD LINE goes below the SIGNAL LINE
Some traders prefer a HISTOGRAM that plots the variance between the MACD LINE and the SIGNAL LINE
Here is how it all looks at the bottom of the chart:
The “trap” might possibly be the SELL “signal”:
Followed by apparent “range buying” and then a bullish continuation:
You can see how the buying went from the bottom of the range to the middle of the range to the top of the range; and then the breakout…
I was impressed with Rande Howell on YouTube. Really good stuff. My live trading room responded very favorably when I pointed out Rande to them. Might be worth a YouTube search and watch.
On another note; its amazing how Rande’s YouTube videos have 1,000 plays and “how to make $5,000 in 5 minutes trading blah blah blah has 50,000 plays; are people really this gullible?
- The US dollar is down 5-10% so far in 2017 versus AUD NZD CAD GBP EUR and JPY. Expect the USD bearish trend to continue.
- Week to weak the USD seems to be up one week and down the next; but when view on a month to month or quarter to quarter basis, the USD bearish trend is clear and consistent.
- The fundamentals are confusing, erratic and not helpful. Expect that to continue as well. I choose to ignore the fundamentals except…the news releases.
- The Tier 1 news releases (employment, CPI, retail, sales, GDP, monetary policy statement, and Central bank press conferences) are giving strong directional price moves; ignore the news itself and go with the direction of the price action right after the news is released.
- Technically, there is good follow through (20-30 pips minimum) each time the USD makes a new 2017 low for the year in any of the major pairs (AUDUSD, NZDUSD, GBPUSD, EURUSD, USDCAD or USDJPY).
- There is a lot of sideways price action intra-day; making buying support and selling resistance a solid strategy
Good luck and happy trading