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This is part 2 of my 7-part series on trading strategies. Click here for part 1: The Real Reason.
Forex Trading Strategies #2 – The Right TimingOne of the great advantages of Forex is that the market is open 24 hours a day, from Sunday U.S. evening to Friday U.S. afternoon, or a total of around the clock 5 and half days of trading per week. Now to understand the Right Timing, we need to look at the trading schedule just a bit closer:
UK quarterly GDP release is always a high impact report. With this being the Prelim release, or the first release of three, we are likely to see more market participation. Here is the forecast number:
4:30am (NY Time) UK Revised GDP q/q Forecast 0.1% Previous -0.3%
ACTION: GBP/USD BUY 0.4% SELL -0.2%
Retail Sales is usually a very tradable release as traders draw direct correlation between retail activities with economic health.
Here´s Forecast:
8:30am Core Retail Sales Forecast 0.8% Previous -0.5%
ACTION: USD/CAD BUY 0.2% / SELL 1.2%
The Trade Plan
I´m going to be looking for a deviation around 0.4 ~ 0.5% for this news. Since the forecast is at 0.8%, a reading of 0.2% would be negative for the CAD and we´ll be looking to BUY USD/CAD; however, if the opposite is true, or a 1.0% (or better) of actual release, I´ll be looking to SELL USD/CAD.
We’ll be trading the Consumer Price Index (CPI) figure out of New Zealand today. CPI is Inflation, therefore it is a very high impact release. Here’s the forecast:
6:45pm (NY Time) NZ CPI q/q Forecast 0.6% Previous -0.3%
ACTION: NZD/USD BUY 1.0% SELL 0.0%
The Basic Plan
Our focus will be on the headline CPI number. If we get a better release of 1.0%, we should be looking to BUY NZD/USD; if we get a lower release 0.0%, then we’ll see NZD/USD move down. Usually if our BUY or SELL figures are hit, we could expect the market to move about 40~50 pips within the next 30~90 minutes.
We´ll be trading the UK Consumer Price Index (CPI) release at 4:30am NY Time today. We´ll be looking at the yearly release figure and the market could react with lots of volatility as CPI is the basic measurement of Inflation, therefore expect to see more exaggerated moves if we get a huge surprise release. Here is the forecast:
4:30am NY Time UK CPI y/y Forecast 3.5% Previous 3.4%
ACTION: GBP/USD BUY 3.8% / SELL 3.0%
BOE (Bank of England) will be rendering its interest rate decision today, and it would provide strong volatility in the market if BOE´s final decision turns out to be a surprise, here´s the forecast:
7:00am (NY Time) UK Official Bank Rate Forecast 0.50% Previous 0.50%
APT (Asset Purchasing Target) Forecast 325B Previous 325B
ACTION: GBP/USD BUY 0.75% (Rate) / SELL 375B (APT)
We´ll be trading the UK Services Purchasing Manager Index today at 4:30am (NY Time). This is a leading indicator similar to the Manufacturing PMI that was released early this week, here´s the forecast:
4:28am (NY Time) UK Services PMI Forecast 53.5 Previous 53.8
ACTION: GBP/USD BUY 56.0 SELL 50.0
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