In this video:
00:20 Trade what you see on the charts
01:02 Great opportunities to go short on the AUD against the USD
02:28 USD today is looking very strong
05:04 How to be a good currency trader
In this video, I want to talk about trading; what you see, not what you think.
So, let’s get into it.
Trade What You See On Your Charts – and Not What You Think
Hi, this is Andrew Mitchem here, the Forex Trading Coach. Today is Friday, the 2nd of August, and it’s non-farm payrolls day yet again. But before talking about the non-farm payrolls, I want to talk about, actually, how you read the charts. There’s a common problem that many people have, it’s they think too much about their trading in terms of the fundamentals. This came about, I was talking to a person earlier in the week who’s looking at taking my course, and he said to me, “Andrew, you know I’m just concentrating so much on the news, on what’s out there, and I’m missing these moves. How do I overcome that?” And he was explaining to me how he’s missed all of this huge down trend that’s occurred on the AUD recently.
Now, if you look back on your charts into about April, the AUD against the USD has dropped over sixteen hundred pips, and even in the last week or so, it’s dropped more than four hundred pips so, some great opportunities to go short on the AUD against the USD. In fact, the Aussie against almost every other currency, there’s been great opportunities to go short recently. And if you’ve been following my daily strength and weakness analysis, you’ve been seeing that I’ve been mentioning short positions on the Aussie dollar for quite a number of weeks now on most days. But, this particular person was saying, you know, I’m reading the news, I’m sort of getting e-mails, I’m looking at sort of Forex sites online, I’m watching business news channels, I’m reading it in the newspapers, and this guy was in Australia, and he’s saying, I’m just thinking that the Australian dollars going to go up, and as a result, I’ve missed this entire down trend.
Exactly the same thought process he was telling me on gold. You know, everybody was saying a couple of years ago, gold and silver’s going to go up and up and up and up, and so every opportunity to go short on gold or silver he’s missed as well. So, it comes back to the phrase that I’ve used so many times, I’ve used it on these videos, also I’m going to use it on my clients; trade what you see, and not what you think.
I’ll give you another example. In around twelve hours’ time from right now we have the non-farm payrolls, it being the first Friday of the month, and who knows what the announcements going to say, but I can see right now on my charts that the USD today is looking very strong. There’s some weakness in the JPY, and there’s also minor weakness in the NZD and Swiss franc. So, for me, right now, I’m predicting that the USD is likely to keep continuing upwards, therefore you’d expect that the non-farm payroll announcements probably going to be better than anticipated.
Why Fundamental Trading is Difficult
That’s what the charts are telling me. But, also think of this, let’s say the dollar does come out way higher than expected, there’s two ways of thinking of it, because whatever the news comes out, whether it be good or bad, there’s always a human interpretation of that news. So, the news may come out at fifty thousand jobs more than anticipated, let’s say for example, and you may get a whole group of investors and traders that say fantastic, the US is booming because the employment’s just jumped up fifty thousand jobs more than the experts anticipate.
So, therefore, they’re looking at strength in the USD. On the other side, because there’s always two sides to everything, so on the other side, you could say well, let’s analyse that fifty thousand increase in jobs, and other analysts may say, well, yes, it’s increased, but it’s almost all low paying jobs and that’s not what the US needs right now; the US needs, and the world needs, lots of job creation in high paying jobs, in high power jobs. So, the other person, or the other group of people, might look at that fifty thousand increase in the jobs numbers than expected and say, well, the majority of those are just fifteen dollar an hour, basic minimum wage jobs, so actually, it’s not that great for the US economy, and therefore, they might be selling the USD. So, you can see how you get the difference of opinions there regardless of what the news announcement is, which to me, it comes back to looking at these things behind me here, looking at the charts, the charts tell you which way the currency’s likely to go. So, use the charts, and trade what you see, not what you think.
Understanding Different World Time Zones – Why You Need This To Trade Forex
The other thing I want to talk about, and again, this came about as a result of talking to someone overseas, and they said, “Look Andrew, what time’s your webinar in my local time?” And, even though my webinar has lots of options of choosing and selecting the start time in your local time, this person didn’t understand what time New Zealand time is in their particular part of the US, and that’s fine, because New Zealand’s tucked away in the corner of the world. But, my point is, to be a good currency trader, you’re dealing with a global economy, a twenty-four hour moving market, so therefore, it is your job to understand what the time is in Wellington in your local time, or what the New York five o’clock close and open of the day is if you live in London, or whatever it might be, it is your job, if you want to be a good currency trader, to understand different time zones around the world and how it relates to you.
For me, right now at this time of the year, the charts start on a Monday morning at nine o’clock in the morning, but for those of you in, let’s say, New York, that’s 5pm on a Sunday afternoon. But you need to know that information; you need to know if you live in wherever it may be how that time relates to your local time. A site that I’ve used quite often is called timeanddate.com, but just something to be aware of, don’t rely on other people to tell you the answers of what the local time might be in your particular time for an event, work it out yourself and you need to know that type of information.
So, that’s all for now; two really important points there. So, let’s recap; trade what you see, not what you think, and also get to understand the world time zones to be a good currency trader.
That’s it for now. This is Andrew Mitchem, the Forex Trading Coach, have a great weekend, I’ll talk to you again this time next week.