Hi Traders
I would like to share my observation about Yen pairs with you. I experienced that the Yen pairs are quite volatile, some times volatility of Yen pairs is strong enough to throw out any high probability swing trade.
There are couple of following points I consider when I take the trade on Yen pairs.
1. Bar Size:
Some of us are always in doubt in determining the size of the set up bar in Yen pairs whether it is normal or over-sized bar? because most of times the bar size in Yen pairs is over 100 pips. If we analyse this in isolation certainly those bars are over-sized but for Yen pairs this size is normal as their volatility justifies it. Still some of us think that any bar over 100 pip size is over-sized bar & not suitable to place the trade.
I have taken guidance on this topic from my K2A coach who gave me a really good tip. He advised me that I should take help from ATR(20) reading whenever I am not sure about the bar size; as it averages the last 20 bars & gives the average bar size. If the set up bar size is near or not far from the ATR(20) reading then the bar size is OK to place the trade as long as trade opportunity ticks all other check boxes in the list.
If you check the ATR(20) reading in all Yen pairs, you will find out that all readings are over 100 pips which means that in Yen pairs its normal to have a set up bar over 100 pips size. So whenever someone is not sure about the bar size s/he should take the help from ATR(20).
I personally don't feel comfortable to place the trade on Yen pairs if the bar size less than 100 pips, as volatility can stop out the trade. In this case I only use half a percent risk per trade if I find a potential high probable trade.
Don't forget that Good Money Management & Capital Preservation are the keys to stay in the game, as trading is not about how much money we can make, its about how much money we can afford to loose.
2. Major News Releases
Although our X-Risk Manager Mr. Tom Franklin advised us to consider only Non-Farm Payroll but I found out that some of Monthly or Quarterly news (e.g. FOMC) also has enough potential to throw out any high probability trade just like it did few days ago.
Its my personal opinion that before placing the order we should check that whether next day
* Is there any Monthly or Quarterly news coming out?
* Is there Mr. Ben Bernake (Chairman of US Federal Reserve) / Mr. Mario Draghi (President of European Central Bank) or Mr. Mark Carney (Governor of Bank of England) speaking?
If there is a news like that then we should check the news impact on concerned currency pair in the past (at least last three times) & should analyse this impact it created in . If the bar on news day engulfed the previous day's bar then we should know that our trade can be dangerous & risky, I will personally avoid that. So far I have found FOMC news release which creates enough volatility to stop out the swing trades. I got bitten by FOMC news release once in past.
So be careful to place the trade on Yen pairs if there are big news announcements next day as they are already volatile & these news announcement makes some vicious moves. This check carries more weight if the swing trade is being placed according to the Prop trading rules due to tight stop loss unlike Income Generator which has wide stop loss so its less vulnerable.
This second check is not just for Yen pairs only, I consider it with all other pairs as well .
- - - - - - - - - - - - - - - -
I would like all the readers of this post to share their experience & observation about Yen pairs. I would love to see what others think about it. So please don't hesitate to share your experience as this way we can learn from each other.
I would like to share my observation about Yen pairs with you. I experienced that the Yen pairs are quite volatile, some times volatility of Yen pairs is strong enough to throw out any high probability swing trade.
There are couple of following points I consider when I take the trade on Yen pairs.
1. Bar Size:
Some of us are always in doubt in determining the size of the set up bar in Yen pairs whether it is normal or over-sized bar? because most of times the bar size in Yen pairs is over 100 pips. If we analyse this in isolation certainly those bars are over-sized but for Yen pairs this size is normal as their volatility justifies it. Still some of us think that any bar over 100 pip size is over-sized bar & not suitable to place the trade.
I have taken guidance on this topic from my K2A coach who gave me a really good tip. He advised me that I should take help from ATR(20) reading whenever I am not sure about the bar size; as it averages the last 20 bars & gives the average bar size. If the set up bar size is near or not far from the ATR(20) reading then the bar size is OK to place the trade as long as trade opportunity ticks all other check boxes in the list.
If you check the ATR(20) reading in all Yen pairs, you will find out that all readings are over 100 pips which means that in Yen pairs its normal to have a set up bar over 100 pips size. So whenever someone is not sure about the bar size s/he should take the help from ATR(20).
I personally don't feel comfortable to place the trade on Yen pairs if the bar size less than 100 pips, as volatility can stop out the trade. In this case I only use half a percent risk per trade if I find a potential high probable trade.
Don't forget that Good Money Management & Capital Preservation are the keys to stay in the game, as trading is not about how much money we can make, its about how much money we can afford to loose.
2. Major News Releases
Although our X-Risk Manager Mr. Tom Franklin advised us to consider only Non-Farm Payroll but I found out that some of Monthly or Quarterly news (e.g. FOMC) also has enough potential to throw out any high probability trade just like it did few days ago.
Its my personal opinion that before placing the order we should check that whether next day
* Is there any Monthly or Quarterly news coming out?
* Is there Mr. Ben Bernake (Chairman of US Federal Reserve) / Mr. Mario Draghi (President of European Central Bank) or Mr. Mark Carney (Governor of Bank of England) speaking?
If there is a news like that then we should check the news impact on concerned currency pair in the past (at least last three times) & should analyse this impact it created in . If the bar on news day engulfed the previous day's bar then we should know that our trade can be dangerous & risky, I will personally avoid that. So far I have found FOMC news release which creates enough volatility to stop out the swing trades. I got bitten by FOMC news release once in past.
So be careful to place the trade on Yen pairs if there are big news announcements next day as they are already volatile & these news announcement makes some vicious moves. This check carries more weight if the swing trade is being placed according to the Prop trading rules due to tight stop loss unlike Income Generator which has wide stop loss so its less vulnerable.
This second check is not just for Yen pairs only, I consider it with all other pairs as well .
- - - - - - - - - - - - - - - -
I would like all the readers of this post to share their experience & observation about Yen pairs. I would love to see what others think about it. So please don't hesitate to share your experience as this way we can learn from each other.
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