July Trade Recap, EUR/USD & GBP/USD Forex Market Commentary – August 19th 2015
I mentioned last week that I was coming close to finishing the July trade recap video. For anyone who doesn’t know or is new to DTFL, I do a recap of all valid trade setups using the bank trading strategy. What is critical to remember is unlike the commentary that you are reading, in the daily market preview video that I do for members I pick exact levels to trade from. When I say exact I mean exact…down to the pip. If you combine an exact level with a mechanical entry technique and mechanical trade management rules you can verify the validity of a trade. Also its important to note that the levels are selected in advance. With that being said when we look back on the previous day we know what trades setup and whether or not they were a winning trade or a losing trade. Being able to look back on a months worth of trades really puts things into perspective.
One of the biggest problems associated with someone who wants to learn to trade forex successfully, is system jumping or switching from one trading system to another. Successful traders do not system jump and that is an undeniable fact. Therefore by showing profitability over the long term my goal is to get people to actually dedicate themselves to learning one trading strategy rather than jumping from one to another.
As a spoiler to the July trade video, the net profit was +32.5%. It important to remember that this is only based on trades taken on the EUR/USD and GBP/USD. Also we never have more than one trade running at any given time. Therefore no more than 2% of your account would have been at risk during any point of last month. Total there were 22 valid trade setups. Out of those 22 trades 2 were break even, 1 was a full 2% loss and 19 were winning trades. Our win/loss ratio was 86% which is higher than normal. The power behind this day trading strategy is NOT the win/loss ratio, rather the real power of this trade setup is the reward to risk potential.
If you did not catch May and June then check out the links below.
EUR/USD Remains Weak
The EUR/USD did not produce a valid trade for me today. Overall the Euro never made a push into an upper manipulation point and the first lower manipulation point broke prior to the start of the European session thus making it invalid. We did have a lower level around the 1.1015 area but the market never made a push into and stop run of that level. As a result no trade was taken.
Today I will keep my bias open on the EUR/USD again. While I do favor a short until proven otherwise I would consider a long from one of the lower listed manipulation points if a valid confirmation entry were to setup. One reason I’m still open on direction is because of the FOMC meeting we have later today. As the Euro has been pushing to the downside we may see some squaring of positions ahead of the news and thus a slight push up would not shock me. On the other hand if a rate hike is expected later this year then hawkish bias would be expected during the meeting thus supporting a move down. As you can see keeping a directional bias open is probably the best bet as one could make a short term case to both sides. As a result it is better to let a valid setup make the determination for us.
Huge Shift In Direction For The GBP/USD
Yesterday I was looking for the second push to the downside. As I mentioned in last night daily forex commentary, “A higher than expected CPI could create a very sizeable run to the upside and shift trend as it would support a future hike.” Obviously CPI came out higher than expected which created that shift in short term trend that I was talking about. News is a factor that we cannot predict before hand which is why I personally avoid it. Yesterday is a great example of how the confirmation entry technique protects us when an unexpected move occurs. When the market came into all of the pre-selected levels from yesterday it simply blew straight through them without producing a valid trade setup. A trading strategies ability to keep you out of bad trades is just as important and many times more important than its ability to get you into good trades. Keeping us out of bad trades is one of the strong suits of the bank trading strategy and trade management techniques.
Like the EUR/USD, I will remain open on trade direction today on the GBP/USD. The GBP/USD has great levels to work from today. When selecting manipulation points I’m essentially asking myself, “where is the liquidity located”. For anyone who is short right now where are their stops, and what about those who are long? When asking those questions you give yourself a good indication of where liquidity may be located. The nice thing about the current chart on the Pound is the fact that both the first upper and lower level have nothing else around it. When there is only one level to choose from in a given area the strength of that manipulation point is increased. Like always we still need to see the entry criteria satisfied once the market reaches any pre-selected manipulation point before any trade can be taken.
Forex News For August 19th 2015
US CPI M/M 8:30 AM Eastern: Both the headline as well as Core CPI are expected at .2 this month. A .1 deviation +/- from the expected number will create at least a 15 pip spike. The long term follow through of this news has been very shaky with most months seeing a market reversal on a deviation from the expected number. If the market has made a directional move for the day and then the news spikes in that same direction, that is often when the news is used to reverse the price.
US FOMC Meeting Minutes 2:00 PM Eastern: This is going to be an interesting meeting as the market is looking for a rate hike is September and therefore the closer we get to the end of the year the more in focus these meetings will become. I don’t see how they can hike rates but maybe they want to start the market crash, who knows. Obvioulsy more confident talk of a hike this year will cause USD strength, at least in the short them. A backing down from the end of the year rate hike will cause at least short term USD weakness. Either way I will not be carrying a trade into this news.
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