RE: CHARTS -T LINE TIPS10 Jul 2016 09:25
Good morning fjilez. First of all that chart is not a good example of trading the non farm payrolls as the trade was incomplete. Please refer to the last paragraph of the blogg and the third sentence at the beginning for an explanation. The trades should have had 6 long positions as well at or around 11076 before 13.30.
Now the chart. WHEN one places a bet with IG a blue line comes up on the chart for a long and red line for a short at the price level on the chart at which the bet was struck and a box at the extreme left hand side shows the profit or loss on the bet at any given moment. blue for profit red for loss.
The thick red lines you refer to are the above and not part of my chart drawings or technical indicators.
The trade was botched and not complete so I panicked and closed out all positions soon after that snap shot to retain whatever profit was there and walked away.
The aim of the trade is to take advantage of the markets knee jerk reaction to the non farm payrolls published every 1st Friday of the month at 13.30 British time.The number of pips involved are usually at least 40 pips in one direction but quite often can be in both directions VERY RAPIDLY. Impossible to trade. As one does not know the results and how the market will react a straddle is put in place I.E Going both long and short, ideally at the same price. This means loss is restricted to the spread whichever way price goes. Invariably sometimes in as little as 30 minutes price returns to normal.
The key to profit is the timing of closing the winning trade and waiting for the losing trade to return to zero loss or someway between strike price and the price one closed the winning trade. The net profit is the winning trade profit less the losing trade loss, hopefully zero loss if price has retraced to where it was at 13.30. It also presents the opportunity to ride the reversal by placing a bet in that direction thus doubling the pips profit. They invariably form V shapes in the case of a short and an inverse V in the case of a long reaction to the payroll news.
please see previous month's charts which hopefully illustrate the strategy far better than me trying to in words. I got 60 pips profit but it should have been 120 as the second chart confirms price retraced back to 13.30 price and beyond by approximately 14.15.
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