As i'm a glutton for punishment i thought i'd put forward the following strategy (if only to get some constructive criticism) and to tell me where the main flaws are.
Before i begin i want you all to know that i'm a total new comer to this market- so go easy on me.
Here we go-Main points:
As the FX markets can be extremely volatile, the strategy aims to place bets (with stops )in either direction of a trade.
As i have only traded with Finspreads i can only give an example of prices which were available mid afternoon.(GBP/USD)
Daily Spot 1.8209-1.8215
March Forward 1.8189-1.8197
*The reason i have selected 2 different time periods is that if i had a bet in each direction on the same price one trade would cancel the other out (this is probably the first flaw already)
Lets say I want to go long the £ - I buy the spot at 1.8215 (placing a stop at 1.8175).-40 pip stop
I then sell the forward at 1.8189 placing a stop at 1.8229-another 40 pip stop.
*I have followed how the daily spot and forward react to movements and they seem to move in line pip for pip
Lets say the market advances to :
Daily Spot 1.8289-1.8295
Forward : 1.8269-1.8277
I could then sell my long at 1.8289-(74 pip profit ) and be stopped out on my sell at 1.8229 (40 pip loss)
net position would be 34 pip profit.
Rather than write down the opposite of a 80 point move in the opposite direction the outcome would be roughly the same- about 32 (wider spread for forward)pip profit .
The flaws i can see are as follows:
If the market doesn't move much i wil be caught in a wide spread
If the market over reacts with wild swings in both directions i would be stopped out with an 80 pip loss
I'm sure there are other more economical ways to hold this position (ie without the wide stops mentioned above)
Could only be used for day trading
I thought this may be a useful technique to use before the announcement of any major figure fomt he BOE or from over the pond where investors knew there would be a big movement but unsure of the direction.
The strategy i've mentioned above is something i have thought about from reading posts from other members and i don't claim any originality for the idea.
Ok that's got it out of my system- so come on - SHOOT ME!
Before i begin i want you all to know that i'm a total new comer to this market- so go easy on me.
Here we go-Main points:
As the FX markets can be extremely volatile, the strategy aims to place bets (with stops )in either direction of a trade.
As i have only traded with Finspreads i can only give an example of prices which were available mid afternoon.(GBP/USD)
Daily Spot 1.8209-1.8215
March Forward 1.8189-1.8197
*The reason i have selected 2 different time periods is that if i had a bet in each direction on the same price one trade would cancel the other out (this is probably the first flaw already)
Lets say I want to go long the £ - I buy the spot at 1.8215 (placing a stop at 1.8175).-40 pip stop
I then sell the forward at 1.8189 placing a stop at 1.8229-another 40 pip stop.
*I have followed how the daily spot and forward react to movements and they seem to move in line pip for pip
Lets say the market advances to :
Daily Spot 1.8289-1.8295
Forward : 1.8269-1.8277
I could then sell my long at 1.8289-(74 pip profit ) and be stopped out on my sell at 1.8229 (40 pip loss)
net position would be 34 pip profit.
Rather than write down the opposite of a 80 point move in the opposite direction the outcome would be roughly the same- about 32 (wider spread for forward)pip profit .
The flaws i can see are as follows:
If the market doesn't move much i wil be caught in a wide spread
If the market over reacts with wild swings in both directions i would be stopped out with an 80 pip loss
I'm sure there are other more economical ways to hold this position (ie without the wide stops mentioned above)
Could only be used for day trading
I thought this may be a useful technique to use before the announcement of any major figure fomt he BOE or from over the pond where investors knew there would be a big movement but unsure of the direction.
The strategy i've mentioned above is something i have thought about from reading posts from other members and i don't claim any originality for the idea.
Ok that's got it out of my system- so come on - SHOOT ME!