Bought an upside corridor touch about 12 hours ago spot [~210.50] on the expectation of a ramp in the index futures. Paid 55/100. I took it up to 212 on spot and covered the touch at 76/100. Considered selling spot to hedge, but didn't want to carry the position on the chance the index rally retraced by Sunday's expiration:
i have a equity backround but interested in fx. any brokers you would recommend? i was thinking of oanda just to get my feet wet with a small account. they worth it?
Good question. Let me see if I can articulate the answer properly. 212 is a great example. When we say 212 we're really discussing 211.80 - 212.20 as most traders aren't dumb enough to place orders right on the number. 212 was a recent high that was severely rejected. It was also major S/R within the past 72 hours which makes it even more valid. (My experience is that if an S/R hasn't been visited at least one other time within a 72 hours or the current trading week it is a rather weak S/R.) Based on that I'd have to assume the following: A. Many traders who were long also recognized 212 and sold for a profit rather than risk a sell off. Many were right and some panicked as selling began, were not willing to hold so sold on the way down for less profit. This fuels the sell off. B. Many traders who were short from the longer term - maybe from the last break of 212, maybe from a 1000 pips ago - set thier stops at +/- 212 because it was break even or they wanted to lock in profits at an obvious R point. This fuels the sell off. C. Many traders who also recognized 212, and a break there of, as a break of R viewed this as a buying opportunity, looking to get in early. They bought what groups A and B were selling. Many got burned and were forced to sell and many had thier stops around 209.85 which is the closest S point. This fueled the rally back to 212. D. Many in group C decided to hold through the sell off. Guess where they set thier stops? At break even around 212 where they bought and they feel very lucky to get out. This fueled the sell off and another test of 212 we now see. E. Many now sit on the sidelines as this price action war plays out knowing that this time is a little different seeing that price found some support at 211. This is the basic anatomy of an S/R point and plays out over and over again. Short term, long term - it doesn't matter. One can make a living just trading the price action around S/R points. Back to the question and answering forgeting the knowledge of what already happened, which was another failed test and sell off at 212. How would I have handled 212 long? If price broke above 212 then 212.25 or so. I'd be looking at the 15min chart to see if the run had real legs. Then I'd look at the 1HR to confirm. I'd see if news alone pushed the price so the price action before the break would confirm. If the break looked sustainable from a TA and tape point of view I would probably buy (with smaller position size due to increased 212 risk) on a small pull back and bounce on the 5min or 15min. If it appeared to be a lazy, indecisive break I'd wait for the next retest of 212. or if price was still wallowing around 212, even a bit higher, I'd wait for a test of 212.65 which is the closest R above 212. Another test of 212 seems likely very soon. Lots of drama @ 212.
sorry for my ignorance on this market, but what are a couple good pairs to focus on in the early stage of trading fx or is a mini a better instrument? thx