Would you like to know the safest and easiest way to make money as a trader of Forex, and why no one wants you to know about it?
Follow along and I will explain: First, let’s look at one of the many news releases that come out each month … and see for ourselves if we can consistently predict market movement based.
We will look at 5 months of data for the ISM Manufacturing.
Before we look at the actual data lets break down exactly what the ISM Manufacturing is and where it comes from…
The data is organized by the Institute for Supply Management. The institute monitors purchasing manager’s activity. Surveys are taken regarding new orders, supplier deliveries, production and employment.
An increase in the ISM Manufacturing has a positive affect on the nation’s currency. By virtue of their position, purchasing managers have early access to company performance data which can be an indication of economic performance.
In laymen’s terms the higher the ISM report the better for the U.S. Dollar…
With that in mind what will happen to the GBP/USD currency pair if the ISM is released higher than expected? Let’s take a look at March 2006 the ISM Manufacturing release was expected to come out at 55.5. This means the market has adjusted for this figure. The actual release came out 56.7.
So the ISM Manufacturing came out higher than expected which strengthened the US Dollar causing the GBP/USD to fall at 10 am eastern time.
Within 10 minutes the market moved over 35 pips in the exact direction we predicted it would move based on a higher than expected number. (See chart).
Now let’s look at another one…
If a higher than expected number strengthens the US dollar than it stands to reason that a lower than expected number would weaken the US Dollar causing the GBP/USD to go up.
The first thing we need to know is what the analysts expect the ISM to come out at. We looked at March now lets look at April, 2006. The ISM is expected at 57.7 so the market has adjusted for this and is awaiting the actual release.
The ISM Manufacturing on April 2006 came out at 55.2 which is lower than the expected number. From what we have discussed thus far what do you think the GBP/USD will do considering the number came out lower than expected?
This of course weakened the US dollar allowing for myself and many other traders to take a long on the GBP/USD for almost 30 pips…
So far we have looked at two situations where the market did what we expected. However, as the saying goes a blind squirrel finds an acorn every now and then. A thought just like that is probably going though your mind as you read this but I can assure you it really is that easy.
Let’s look at another example…
May 1, 2006 the ISM manufacturing is expected to be released at 10 am Eastern – and the analysts are expecting 55.0.
Once again the market has adjusted for this expectation and is awaiting the actual number so that it can quickly adjust further if need be. The actual number comes out at 57.3 which is 2.3 higher than expected. Without looking at the chart below or reading any further see if you can guess which way the GBP/USD is going to go.
The number came out higher than expected which strengthened the US dollar providing you with the opportunity to go short on the GBP/USD which fell for a potential profit of almost 50 pips in just over 10 minutes.
Can this be possible? Is it realistic to assume there is a cut and dry way to trade the Forex?
Let’s look at some more examples and find out…
June 1, 2006 the ISM Manufacturing is expected at 55.7. Now lets assume for a second we are in front of our dealing station and awaiting the actual numbers. We have our order box open and we are ready to go.
If the number comes out higher than expected we will go short on the GBP/USD and if it comes out lower than we will go long. Again the expected number is 55.7. The actual number is 54.4 is less than expected so we immediately place a buy order.
Looking at the chart below do you think you would have made a profit?
Once again in less than 10 minutes the market moves over 55 pips… Truly amazing…
I don’t think I need to show you another example, but just to prove the point I will.
June 3, 2006 ISM Manufacturing expected at 55.0. One again we wait for the release to come out at 10 am Eastern. As the number is released we realize it is lower than expected by 1.2 coming at 53.8. We immediately take a long position knowing that the lower than expected number will weaken the US dollar.
We are not guessing we know that this information will weaken the dollar. If the US dollar gets weak then it is inevitable that the GBP/USD will go up.
Once again within no time at all the market has moved almost 40 pips and was predictable.
You might be asking yourself… If this works so well than why haven’t I heard about this? And why does everyone tell me to stay away from news trading and concentrate on tech trading?
There are a couple of reasons why this occurs…
First, brokers are in the business to make money. 97% of all Forex traders fail and brokers know this. Technical forex trading is going to accomplish 2 things. First it will have you trading multiple times a day which creates revenue for them based on transaction fees. And secondly, most brokers are holding your position in house which means if you lose they keep the money. Being that 97% of tech traders fail it is a win win for the broker.
How about training companies, why would they suggest to tech trade and hide such a powerful trading secret?
First, most companies not only train you but the will refer you to a broker and collect the same transaction fees that the broker is after each time you trade. In addition it is very easy to create gimmicky type products based on proprietary indicators, and so on.
One reason something as cut and dry as the trading the news isn’t marketed by training companies is IT’S TOO SIMPLE. There is no big secret and no big course to sell for a big price. But simplicity is powerful… Trading the news truly is cut an dry and void of guessing, and thus exceedingly powerful and profitable.
Professional Trader and Forex Funds Manager
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Alexander Nekritin has a been a professional trader for over 10 years and is the Founder and President of TradersChoiceFX.com. TradersChoiceFX is a Metatrader Forex Brokerage firm that is able to enhance their clients FX trading success through their through their Forex bonus program. TradersChoiceFX also strives to set clients up with the ideal environment for their Forex strategy. You can download a free Metatrader Practice Account from TradersChoiceFX and get instant access to a special report that will teach you how to use a Forex bonus program to improve your success as an FX trader.