Guys, Anyone has some numbers on the average range on a daily basis for EUR/USD and USD/JPY ? Regards, Virgin.
Virgin, I have been trading live EUR/USD for over a month now. I also have been trading USD/JPY for... longer than I care to... I'll give you my synopsis. When I trained in fx trading I was told the daily average trading range is 30 points. However, it appears that fx has, as expected, grown. I have seen the majority of days pip range to nearer 100 points than just 30. I attribute this to an increase in overall trading volume. USD/JPY, as far as I knew, was a slow trading pair with an average daily volume of rarely more than 20 points. A trading buddy of mine IMed me a few weeks ago and said, "Hey, wanna make a quick 50 points?" I said, "sure!" He replied, "USD/JPY has these... small spikes. They always go down. Just set a limit short order for 105.85 and walk away." I didn't do that, but I did notice the spike forming. For as far back as a year it was true! Every "spike" they formed went down. At around the 106.50 level I started shorting it. It climbed higher so I shorted it more. A few days later my buddy IMs me again and says, "Sam I got a margin call." I felt pretty bad for him then later found out he gets them ongoing due to his trading style. I continued to take out shorts in USD/JPY all the way to over 112.00 level. My original plan was for the pair to not go any higher than 106.00 and I felt fortunate that it even climbed to 106.50. However, as soon as I got in the trade the USD rally hit based on nothing but thin air rumors that never manifest. During the rally the pair has spiked up 700 points! I was in trade during all of it and have been trading it daily during its ascent and descent (is has given up around 200 points). The pair stabilized enough that I started scalping successfully. After about 6 successful scalps the terrorist stike happened in Spain. Upon news of the Madrid terrorst attacks it became very volatile again, moving up 100 points from where it was trading in the UK session. I was again caught in a drawdown - but waited until the Toyko session when the dollar had more liquidity and went down enough for me to unload the units I had piled up during my previous short scalping. EUR/USD has recently fallen 800 points. Please consider that most traders trade sizes that can tolerate no more than 10 to 20 points before they get a margin call. To try to compensate for poor trading systems they set a tight stop loss. Therefore, if daily trading volume effects your trading structure, pls realize that what happens one day may very well not happen the next, with moves being exagerated. One trader posted recently how he got vaporized during a trading period of a couple days due to a price swing that was greater than his margin/planned trade could tolerate. In trading fx, be sure to plan for extreme moves and trade accordingly. As Bill Lipschutz indicates in The New Market Wizards, he was in a large dollar short when Gorbachev made an announcement that sent the USD up 100 points. He was staring at a $90 million dollar drawdown in 6 minutes. After you get in a trade, that is when it can hit the fan. Sam
The time I was scalping successfully was the early Toyko session, then USD/JPY climbed through its session on news that compared the Japan economy to being fragile with the Madrid terrorist attack, through the UK session. When the NY session started it began falling, allowing me to unload the build up. Regards, Sam