My start of day sequence for Forex trading

My start of day sequence for Forex trading

 My start of day sequence for Forex trading

Within the Courses on Forex training programme I explain my start of day sequence for Forex trading. This article gives the essence and feel of what I do each morning when I fall out of bed and begin to attack the Forex market.

Maintain any open trades

Anyone who has read my article outlining the top 5 reasons why Forex traders lose money and why they don’t need to http://coursesonforex.co.uk/?p=30 or the article about my rule of thirds trading http://coursesonforex.co.uk/?p=930 knows that I basically NEVER close trades that are running at a loss. Therefore the first thing I do each morning is check out my open trades to maintain them. This could mean closing them for a profit, moving the associated take profit instructions to new pivot points or perhaps changing the position of pending orders that are in place to protect my open orders in the event that something goes terribly wrong. I see this as reviewing and redeploying my troops for the battle ahead!

Get a feel for the day so far

My next task is to get a “feel” for the day and how things have moved overnight. There are 6 steps involved in this:

Step 1 – Review the 15 minute candlestick chart

If it is before 8.30 am (UK) I take particular notice of how the 15 minute candlestick chart has been moving from about 4.00 am (UK) onwards. This is because I believe that momentum that builds up in price direction from 4.00 am can continue up to around 8.30 am and can be magnified by the effects of the European markets opening at 7.00 am (UK) and the British market opening at 8.00 am (UK). If other signals look positive I can often use this momentum to get a first result for the day.

Step 2 – Check out the rule of thirds

rule of thirds

Rule of Thirds

I simply note the background colour of the screen and know whether I am in buy, sell or buy and sell mode. This has NEVER let me down. No trade has ever failed when undertaken in the appropriate screen area. By the way, this tool is available to purchase from the http://coursesonforex.co.uk webshop.

Step 3 – Review the candlestick charts

I simply look at the charts and try to determine which way the trends are currently running. I start with the 1 week charts (each candlestick representing 1 week) to get a longer term view. Thereafter, I look in turn at the 1 day, 4 hour, 1 hour, 30 minute, 15 minute, 5 minute and 1 minute charts. This process really puts me in the “zone” giving me a real understanding of how things are moving.

Step 4 – Look at Jeff’s Lines

jeffs lines acting as pivot points

Jeff’s Lines acting as pivot points

All of these lines act as pivot points. The first of my lines acts less as a pivot point and more of a price direction for the day indicator. These lines a no less than “brilliant” even if I do say so myself. For example on 70% of days the price will reverse when it hits the first of my main lines.

I examine the candlestick charts to see if my lines are giving me a clear indication of direction and where the current price is in relation to them. So, for example, I am not likely to place a buy trade if we are moving closer toward one of my above the start of day lines.

Jeff’s lines will be discussed more fully in their own dedicated article in the near future. The MT4 add-on to have them appear on your trading screen can be purchased from the webshop at http;//coursesonforex.co.uk

Step 5 – Review of the Bollinger Bands

Bollinger Band squeeze

Bollinger Bands in Action

My start of day sequence step involves looking at how the price stands in relation to the top, middle and bottom Bollinger Bands on the 1 minute, 5 minute and 15 minute candlestick charts. Basically, I expect the price to move between the three lines and want to know which way it is moving from the start.

This blog has a full article on how I use Bollinger Bands at http://coursesonforex.co.uk/?p=991

Listen to the general news

Throughout the start-up sequence I am listening to the radio or TV news. I am listening for anything that may have happened that either has or may affect prices in the forex market prices. This may be economic news, political news or events such as natural disasters.

Checkout the scheduled economic news

I use a website called the Forex Factory www.forexfactory.com to find out what important scheduled economic news is due to be released over the course of the day. Not only does this website tell me what new is due to be released it also tells me what time it is to be released and what the forecast for the news item is.

Forex Factory

The Forex Factory

Because no news was due today I looked at the following day. This is shown in the screen shot. It shows that there are 4 significant new items due out tomorrow:

  • 9.30 am (UK) The UK claimant count change will be published. In this example it is telling me that the number of people claiming unemployment related government benefits in the UK is forecast to be 31,000 lower last month than it was in the previous month. If the actual figure turns out to be significantly different the GBPUSD price may move significantly on publication.
  • 10.30 am (UK) The Governor of the Bank of England will give a speech and the Bank of England’s inflation report will be published. These events to could affect the price if they are more hawkish or dovish than expected.
  • 1.30 pm (UK) The  US Government will publish the PPI m/m. This is the Producer Price Index and the forecast of -0.6% is telling us that it is expected that the prices achieved by manufacturers for their good is expected to be 0.6% lower for April than it was for March. A negative figure is considered bad for the economy and the currency. However, the news will already have been factored in and the news would have to be significantly different from forecast for it to have any effect. In addition, the news is flagged as orange rather than red so it does not have a record of moving the currency value strongly.

The point about scheduled news is that some of it can affect the value of currencies and therefore the prices of pairs such as the GBPUD. The questions are;

  • Which news items move what prices if different from forecast?
  • How much do prices have to be different from forecast for each type of news to move the price of different currency pairs?
  • How can we use such information to our advantage in trading?

The Courses on Forex home study course answers all of these questions. In addition, our on-going support keeps a constant watch on what is happening and on how different types of news is growing or waning in its influence.

About The Author

Jeff Fitzpatrick

Probably the UK's most successful home Forex trader