A simple yet profitable currency trade is the "continuation trade." Here's a chart from Oanda that shows the continuation trade that I made this weekend.
Here's the setup:
- The currency pair must be in a strong trend on Friday and the pair must remain strong as the close approaches;
- Enter a position in the direction of the trend 5-10 minutes before the close (be careful to buy/sell before spreads increase) and set a profit target of 30-60 pips out...the size of the profit target really depends on how volatile a currency pair you trade;
- Make sure to set a stop...I used the SAR level for the above trade.
That's it...easy. The idea behind the trade is that the currency pair tends to continue in the direction of the trend when the markets open up in Japan and Australia. There are several reasons that explain why the continuation occurs and I'm gonna leave those up to you to determine. This has been the 3rd weekend in a row that I've profitably traded this setup and I'm sure there will be many more.
Good luck out there.
TLT
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