Are you waiting for a setup in the Dollar? Here’s what I’m doing
Dave Floyd is a professional FX and stock trader based in Bend, OR and the
President of Aspen Trading Group. Dave’s approach to FX combines technical
and fundamental analysis that results in trades that fall into the swing
trading time frame of several hours to several days. For a free trial to
Dave Floyd’s Daily Forex Alerts
In my nearly 12
years of trading experience I am always amazed at
how many traders are more interested in being "entertained" than "making
money". While I suppose if you are talking with someone who is gainfully
employed, has full contributions to the their retirement plan and plenty of
disposable income, then I guess a few thousand in a trading account is more like
a weekend in Vegas than an investment vehicle for wealth accumulation. However,
traders who make their living primarily from the markets have no such illusions
– for us, myself included, the entertainment comes from being right, not simply
for the sake of the "rush". Let’s illustrate this with the current FX market.
Despite last week’s sharp sell-off in the
Dollar Index (DXC) I really has expected more volatility after Labor Day.
As we know, this has not been the case. Up until Thursday I simply saw no
reasonable trade set-ups that met my criteria…this was well founded as most of
the set-ups went nowhere. Today’s close call with a trend-line break came
very
close to getting me to initiate a trade for myself as well as my clients.
However, something did not feel right about the
trade. A good friend and accomplished FX trader echoed the
same thoughts. Traders with a few years under their belt know what I am driving
at–it is nothing tangible, it is simply a collection of observations that has
led you to this decision. What is important is that that insight can never be
attained if one dabbles or fails to focus on one or two techniques or
instruments in their trading. Dabblers can never gain the insight required to
become great, and more importantly, when to step aside.
Will my decision turn out to be the best course of
action? For now, the answer appears to be ‘yes,’ any short dollar trades initiated
when the DXC was trading at 86.68 (on the verge of a break-down) this morning
are now under water. This does not mean they will not ultimately work out, but
I suspect more observation is needed before I know in which direction my next
trade will be.
Open Position:
Short NZD/CAD from .8356 – covered half last
evening at .8322
As always, feel free to send me your comments and
questions.