I'm fairly new to trading the EUR/USD and do so using the CME futures rather than interbank market. Anyhow, does anyone who regularly trades this notice the bank traders "cleaning out stops" during dead times? For instance tonight the EUR is running with no news, the ES are oversold but aren't going anywhere...the two have been moving inversely as of late -- if anything, the ES may bounce in here. We're bumping up against the top of the range in the 10 year bond and the EUR/USD consolidation. As long as we're not breaking out here (on no news), seems like the aggressive move up in the after hours would just be potential stop-running. Is this likely, or do I have the mechanics of the currency markets wrong....? Thanks...
What I like to do is anticipate where the stops are gonna be and place my orders as soon as the market looks like its gonna take them out. Then I take a quick profit and trail the stop tightly and make place it at break even. If there is news on the break.. I always add to my position because usually there will be good follow through. The best trades will be when the market breaks before major news comes out... because then it will really start to rip.
For example right now the Euro looks like its breaking out of its multi day pattern.. if all the the sudden news comes out I will put on a huge position.. because there will be huge follow through. More than likely it will end up pulling back into the range.. because the reall breakout didnt happen yet. And the multi day triangle compression lines will have to be redrawn.
Yeah, I'm looking at the compression pattern as well...have been fading the breakouts for the past few days...which is why I was wondering about cleaning out the stops...since the interbank brokers get paid on a very nice spread and stops are "guaranteed" -- it would be very advantageous to sit there and run the stops to make the spread especially when things are slow...then when we pull back into the range, people put their positions back on and we do the whole thing all over again. I had a short position on as we ran up since we're at the top of our range here and was wondering if this was a fake out... I appreciate your comments...