Corona, CA – Short term trades to long term profits is one of the Money Maker Edge™ major trade positions.
Writing to you today to understand money management and trading in a low volume summer. Summer time trading can be very volatile. That is “can be” but it mostly has a tendency to consolidate a chop around in a range. The advantage for industry players is that they buy off of almost agreed upon support and sell into resistance. This is called “taking the profit out of the market” , and is aimed at smaller investors and funds where their “Trade flow” is a source of income. What that means is that they will make more money trading than on the profits in a trade, causing the fund to trade literally millions of times a day, to get a “fee” from the exchange.
Short term trading – multiple markets in the summer
For us, Summer is time to use small positions to build in to longer swing positions. So we test the market with very limited risk to get into the market. The goal is to catch a position that will be a long term hold and make a large return. We test and test making trades and trades, most with only a very small loss or small profit as the market “chops” up and down before it get’s direction. Before we catch one of these trades we can sometimes see a 1-3% change in our accounts. Remember this is in a period of 3 to 6 weeks as we are working to get in a longer period swing trade.
Here is an example of a trade on the EURUSD. We held the position for about 6 weeks. The patter took 3 weeks to develop and during this time we had 5 positions which had a total cost of 1.2 penny on the account. One of the trades with a minimum risk and good potential landed and we were able to take this for a 5 penny profit, about a 400% return on risk and a good return to the account.
We are trading multiple markets and searching for short term trades that can turn into swing and long term positions. Our experience is that during the summer months until about the 15th of September we will experience low volumes and extended periods of consolidation. Normally, (which is difficult to say with the present geo political climate) we will see more volume coming into the market and less consolidation from September through December.
It takes patience and the ability to manage your risk and stick to your rules to pull a consistent profit in this market place.
Another trade we are working on is the EURJPY or the Euro Yen trade. The Chart is showing an inverted Head and shoulders. There is a possibility of price breaking through the support so we have to wait for tests on support with weakness in order to catch the reversal to accelerate through the resistance that will give us the trade.
Classic Inverted Head and shoulders on the EURJPY
Consolidated entry zone with minimal risk, testing for direction. Looking for direction to play out soon as this consolidated zone moves into a tight squeeze. Sometimes we will have to test 4-6 times to get the swing position. Depends how long the consolidation takes to get the direction.
Summer time trading comes to an end. We are also ready for this next season to start as we can see up to a 5% swing in the account if we have overextended periods of consolidation. Still watching for US dollar strength and some more room on the Euro to correct. Great if you are headed to Europe from the states but can also provide for a choppy market.
We have a few positive positions running as you can see in previous articles. USDDKK in profit, Facebook at risk, USDCHF in profit, AUDUSD in profit, Dollar index in profit. The trades in bold have a preventative stop.