How to Start Your Trading Day Right for Maximum Profits

Checking the market

“Well begun is half done.” – Aristotle

It’s a very good idea to have a helpful, set routine for starting your trading day, rather than just jumping in and trading (bad idea). Therefore, I strongly recommend that you develop one. You don’t have to copy mine, but I’ll offer it here as a reference guide. But before we get to that, a quick update…

Forex Million Dollar Journey Weekly Report: At some point I’m going to find a rhythm and get this thing right once and for all, ‘cause I’m tired of working this hard and then shooting myself in the foot. :) Plus, I’ll just feel a lot better once we get the account over the $1000 level. (Which is still a bit of a journey from where we are now.)

In any event, as of the time of this writing, the Million Dollar Forex Journey account stands at about $75. I’m just going to pretend that we’re starting over – from this somewhat higher level – and work on more consistent, rather than dramatic, gains. Hey, nobody ever said this was going to be easy – but I remain convinced that we can do it. We’ll get there, just hang in here with me.

How I Start my Trading Day

We’ll skip the part where I wake up and go, “Oh man, I overslept – the London market opened an hour ago!”

The first thing I do, before I ever even load my trading platform, is look at the daily pivot points, particularly noting the pivot level, and the S3 Fibonacci pivot support and resistance levels, as these are often good approximations of the outside levels that a given currency pair is likely to move to during the day. There are plenty of places you can find daily pivot levels – I usually just load http://www.fxstreet.com/technical-studies/ on my screen. (Remind me some time to talk some more about using pivot points in trading.)

The second thing I do, again before I’ve even brought up my trading platform, is take a look at the upcoming economic data releases for the day, quickly making a mental note of the times of day I need to be watching for important releases to affect the market. I not only look at them, but I also go as far as speculating on how far up or down a given release might move a given currency pair (e.g., “Could a surprise number in this data release shoot Eur/Usd over 1.3850?”).

Finally, I boot up my trading platform and review both the previous day’s and the overnight action (which, for me, is the Asian trading session). I look at every time frame, starting with the daily (what indication, if any, does the candle formed from the previous day give to the market’s probable overall near term direction?), and then working my way all the way down to the 15-minute charts where I primarily focus my trading. Of particular note is where the 50 and 100 MA’s are on each chart in relation to current price levels (the 200 MA is usually too far away to be of immediate consequence, but if it’s NOT far away, then I definitely make a note of it).

And then, having done all that, of course I just flip a coin to decide whether to buy or sell on my opening trade.

Just kidding. :)

Actually, one of the factors that helps guide me in choosing my first trade of the day (it is, of course, nice to start off with a winner if possible) brings us to our Dance strategy tip of the week.

Dance Strategy Tip – Steepness angle of Moving Averages

This one is fairly simple and logical and all that, but still definitely something to keep in mind, something you always want to notice when making trading decisions in the Dance. The simple fact is that the steeper the angle of the moving averages, the better an indicator they are of market direction. Ideally, you’d like to see at least the 5 and 10 EMA’s rising or falling at about a 30 to 45 degree angle. Very slight angles may indicate a very slight probability of them continuing in the direction they’re heading.

Let’s look at a recent 15-minute chart of Eur/Usd to illustrate:

Eur/Usd chart

On the left hand side of the chart, you can see a nice, steep downslope on the 5 and 10 EMA’s that would have made for a very profitable sell trade. After that, the market turns higher. But note the shallowness of the angle on the 5 and 10 EMA’s on this move up, as contrasted with the steeper angle when they were headed down – and although price briefly rises back above the 50 EMA, the upward movement fails and the market turns back to the downside.

So, all other factors being equal, take the trade where the 5 and 10 EMA’s are showing the steepest – and therefore usually the strongest – angle, either up or down.

Got it? Great! Let’s learn something else helpful now.

Interesting Chinese Facts on Average WEEKLY Ranges of Currency Pairs

This Chinese dame I ran across a few years ago did a LOT of historical research and calculated the average weekly trading ranges of various currency pairs, measured over a 15 year period (so that’s pretty comprehensive historically). She covered about 20 pairs, but I just wanted to hit the highlights of some of the major trading pairs here for you:

Eur/Usd – Had a weekly range of over 300 pips 30% of the time; more than 400 pips only 11% of the time

Gbp/Usd – Weekly range over 300 pips 53% of the time, and over 400 pips 25% of the time, but over 500 pips only 12% of the time

Aud/Usd – Only had a weekly range of over 300 pips 9% of the time

Eur/Gbp – Only had a weekly range over 300 pips 7% of the time

Usd/Jpy – Weekly range over 300 pips 30% of the time, but only exceeded a 400 pip range 10% of the time

Now, how can you make use of such information? Let’s take a simple example: Say Aud/Usd opened the week at .9200, dipped to .9100, and then moved up, by late Wednesday, to .9400. You’re in the trade on the long side and with a nice profit, and you’re wondering if it will get to .9500 by the end of the week (In other words, you’re considering the likelihood of further profit vs. downside risk). Well, the odds say that it won’t get there, since Aud/Usd’s total weekly trading range only exceeds 300 pips 9% of the time. Therefore, you may well consider just taking profits, or at least tightening up your stop and being very much on the alert for any signs of a turn to the downside.

Knowledge of statistics like these can be just one more weapon in your trading arsenal, helpful facts that you can use to maximize your profits with whatever trading strategy you employ. You could, for instance, easily use this knowledge in conjunction with a trading strategy like the Winners Edge Double Trend Trap.

By the way, I couldn’t help but notice that our old friend Gbp/Usd of course roams over the widest weekly range of any of the major currency pairs – the ONLY one that has a range of more than 300 pips over 50% of the time.

All right, enough for now. I don’t want your head to explode. Next week: Honestly? – I have no idea what I’m going to talk about next week – but hey, it’ll be fun! – and informative. (It usually is, right?)

Meantime, may God bless you in every aspect of your life. HAPPY EASTER! He is risen! (Yay, God! You totally rock, dude.)

As ever, your thoughts and comments are not only welcomed, but actively hoped for. And please share anything helpful you find here with other traders you know. Thanks.

Jack Maverick

Jack Maverick is a writer and forex trader. Find him on Google+ at https://plus.google.com/u/0/103534926809963693894/?rel=author and check out his novel, the psychological thriller “A Cross of Hearts”, on Amazon at http://www.amazon.com/Cross-Hearts-J-B-Maverick-ebook/dp/B006GHJ0ZC/

 

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Jack Maverick Maverick

Jack Maverick is a writer and active forex trader. A former futures broker, he is the creator of the 3 Parrots trading strategy, and director of the "Forex Million Dollar Journey". He is also the author of the psychological thriller, "A Cross of Hearts". (And he's very cute, too.) He currently resides in Winston-Salem, NC.
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  • http://jbmaverick.wordpress.com/ Jack Maverick

    Thanks for your comments, Chris.

  • Chris

    Angles of ema’s are great info, absolutely agree. Awesome content Jack, thanks!