ForexGen | EUR/USD Trade

This is an example of the method at work.

The first chart is of the 4 hour EUR/USD.

The main trend as determined by the 89’s and 144’s has been in buy mode for the last 40 days.In fact it has been in buy mode for much longer but the charts I use only show 40 days at a time.

The TI does not need to move from down to up or vice versa before you can trade.It does however need to be in the same direction at the time you enter the trade.

ForexGen | What Does It Cost to Trade Currencies?

An online currency trading account (a “micro-account”) may be opened for as little as $100. Mini-accounts start at $300. Do not laugh—micro- and mini-accounts are a good way to get your feet wet without taking a bath. Unlike futures, where the size of a contract is set by the exchanges, in FOREX you select how much of any particular currency you wish to buy or sell. Thus, a $3,000,000 grubstake is not unreasonable as long as the trader engages in appropriately sized trades. FOREX mini-accounts also do not suffer the illiquidity of many futures mini-contracts, as everyone feeds from the same currency “pool.”

Market Commentary With ForexGen

Nothing too exciting with mostly month, quarter, fiscal year end activity dominating market movement. Euro-zone inflation jumped to record highs, IP in Japan continued to fall taking the Nikkei with it down 2.3% on close of Japanese fiscal year.

JPY - It was all about the fixing. Closed soft in New York on Friday, continuing into the Sydney open, dipping below 98.85 before Japanese fixing demand drove it 140 points to print 100.16. Exporters were at the ready once again above 100 and things are now just a tiny bit higher than where we left them on Friday. Topside offers are expected to remain in place although on this rally a few specs took advantage and light stops have gathered 100.30-50; downside, little to support until low 97s. Eurjpy continues to hover around the 55d, with offers above 158 still capping.

EUR - Record highs in inflation data will add weight to the ECBs concern and gave them more to worry about with Euro. EURUSD has set higher lows over the last week and a short term pivot on the hourlies would be 1.5760. Below there we would expect a look back to 1.56 but still maintain a dip buying mentality while the ECB remains in this dilemma. 1.60 is just a matter of time and with good stops gathering above the old highs it could be sooner rather than later.

ForexGen | Hedging Technique

A hedge is a position or combination of positions in one security that reduces the risk of your primary position in the same security.

An example of hedging in commodity futures is the Midwest farmer who grows #1 Soft Red Wheat and intends to take his harvest physically to market for September delivery. After rilling the soil and planting the seeds in late spring, die farmer initiates a short (sell) commodity futures contract for September Wheat at the Chicago Board of Trade at what he feels is a fair price. If the price of wheat declines dramatically in September, the farmer will suffer losses on his physical delivery but will make profits on his futures contract. If the price of wheat rises substantially in the fall, the farmer will make profits on his physical delivery but will suffer losses on his futures contract. Thus, hedging not only reduces risk but can also be used to lock in predetermined profits in some situations.

Normally when you have an open position to buy or sell at your FOREX dealer, and you open a new position in the opposite direction, the two positions will close each other out. If you had a position for USD/CHF to buy and you opened a new position USD/CHF to sell, both positions would close, since you cannot be buying and selling currencies at the same time. The feature of hedging however, allows you to do exactly that if your FOREX dealer offers this trading feature.

ForexGen Trading Strategy

The idea behind this simple Forex trading system is to capture an early move of the price when it starts to establish its new direction/trend for the day.
As we know the Frankfurt market opens at 2:00 am EST (which is 7:00 am GMT), then an hour later the other giant - London market opens at 3:00 am EST (which is 8:00 am GMT). The European session is the first major session for each coming day.

So, what do we do?We start with 1 hour time frame, preferred pair - GBP/USD and no indicators.The price range we are going to focus on is from 1:00 am EST to 2:00 am EST.We look for the highest high and the lowest low of the price in that range and simply draw parallel horizontal lines through those extremes that will create a tunnel.
Now we are ready to move to a smaller time frame - 5 minute chart - and watch for the whole 5 min candle to close outside the tunnel which will provide a signal for us to enter with the open of the next candle.
We use a 20 pip stop OR the other side of the tunnel - whichever is less.