Stops, Limits and Currency Pair Selection in Forex Trading
We are covering two questions today, and in celebration of Purim holiday - which originated in my home country of Iran - I'm wearing a mask!
Since I'm reporting from the floor of the New York Stock Exchange (NYSE), you could imagine the controversy and the weird looks I got from the floor traders.But hey! A girl's gotta do what she's gotta do :)
How much exactly do you loosen up your stop and limit on weekends to avoid market jumps?
I usually loosen up to the next support or resistance level. Depending on the indicators I have initially used for my technical analysis, it could be the next Fibonacci levels, Ichimoku levels or simply levels that have shown strength in the past.
I have explained about this in far more details in these two videos:
The other question is about how to start your trading strategy, which is an excellent question.
How do you know what currency pair to look into and start the Invest Diva Diamond Analysis?
What's the first clue?
Do you start with the fundamental banking reports? Or technical first?
Here is the short answer:
There are two different ways I select the currency pair, and it highly depends whether I have decided to trade the market, or to invest. What's the difference? HUGE difference! I have explained about the differences between investing and trading here.
So, of you are TRADING, first method is to watch out for a risk event on the economic calendar for the coming days. I usually keep an eye on a currency whose country is about to have an important announcement and if I find enough technical and sentiment evidence that there is going to be a upward or downward trend, I'll complete diamond analysis and enter a trade based on the speculation, or the aftermath of the economic data.
Another method is to first taking a look at the forex dance floor, the chart. Sometimes you can find a trend or momentum that you just can't miss. So you can decided by the market sentiment, then add other indicators such as Ichimoku. Then I back it up with the fundamentals and more thorough technical and sentiment analysis.