Forex Signal (Monday October 3, 2011 – 4:30am EDT) – UK Manufacturing PMI

[Stavro D'Amore]

Hello all,

Please find my trade Plan for UK Manufacturing PMI

UK Manufacturing PMI
Forecast 49.0
Previous 49.0
Pair to trade: GBP/USD

Numbers we need:
BUY GBP/USD if we get 51.0 or higher
SELL GBP/USD if we 47.0 or lower

Economical Impact: High
Typical Result: Good for Currency
Occurrence: on the first business day after the month ends
Spike Probability: Good, we can see 30 pips on initial spike

About our Triggers:
UK Manufacturing PMI is forecasted to arrive at 49.0
We are looking for a deviation of 2 either way on this trade.
If we get 51 or better I will look to enter a LONG position on GBP/USD and if we get
47 or lower I will go SHORT on GBP/USD.
Should this report be triggered, we can expect to see about 30 pips on the initial spike. We have no known conflict for this release. This trade will have a good chance of a 30% retrace on the initial spike, please use 10 pip slippage controls or limit order

What is it? And why does the market care?
It's a leading indicator of economic health - businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company's view of the economy. Traders watch these surveys closely as purchasing managers usually have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.

A higher than expected reading should be taken as positive/bullish for the GBP
A lower than expected reading should be taken as negative/bearish for the GBP.

Method I use to trade this:
Stavro D’Amore Trading Method

I will look for a 30% retracement in the original spike before entering a trade; I will Close half my position as soon as I hit the original high point of the first initial spike and place a SL at entry price. My TP level would be just before a resistance level or if the chart decides to form a support level, looking at a 15 minute chart time frame.

I do recommend spike trading as an option; also the liquidity is very good at the moment if you are using an ECN broker.

Historical Chart and Data for UK Manufacturing PMI

All the best

Stavro D’Amore

 

[Simon Edwards]

any ideas what happened on this one ?

Your recommendations were inline with everyone elses but the market just seemed to completely ignore all the "rules"

 

[ernest02]

Wrong Time!

I keep on pointing out that this news release is at 4:28 EDT and NOT 4:30 EDT, but it seems nobody from FPA are reading these replies.

 

[Stavro D'Amore]

I keep on pointing out that this news release is at 4:28 EDT and NOT 4:30 EDT, but it seems nobody from FPA are reading these replies.

I read them, Ill make changes to the calender system. Thank you

 

[minigan]

any ideas what happened on this one ?

Your recommendations were inline with everyone elses but the market just seemed to completely ignore all the "rules"

the exports orders fell to 45 points --> spike down. erasing the initial gains from positive PMI . there's an article on forexcrunch abt this

 

[PipDog]

Risk Aversion

any ideas what happened on this one ?

Your recommendations were inline with everyone elses but the market just seemed to completely ignore all the "rules"

Stocks headed down...short the dollar at your own risk. And usually loss....

When stocks are down big, I set my triggers on the short USD side on these trades to where it is almost impossible to go against the USD. I don't really want in a short USD trade, but if it hits my triggers...I'll take a shot. The real money is made to take advantage of these negative USD news events and take the reverse. Worked again this time.

There's more to trading the news than just the news.

 

[gorozcoh]

Hi Stavro. Could you please suggest a broker for trading on news. Thank you.

 

[rusko]

the exports orders fell to 45 points --> spike down. erasing the initial gains from positive PMI . there's an article on forexcrunch abt this

Hi there, I trade news from very long time and this is the first time such thing is happening. Also we do not have any info about export order in our autoclicks .. Is this a part of PMI Manuf Index or it is a separate report?

To be honest I lost almost all of my account today ... this was a complete **** .. I was staring at my PC and wondering what is happening ..

 

[Boko Maru]

any ideas what happened on this one ?

Your recommendations were inline with everyone elses but the market just seemed to completely ignore all the "rules"

Banks and or the "smart money" generally know this number before it comes out; it's not a government report (not that they are leak proof either). Today they floated a rumor about 30 minutes prior to the news that the number would come in higher. GU started rising as a result. As soon as the news came out higher, what happened? HUGE sell orders immediately hit the market (probably from same said banks), and GU dropped 100 pips in seconds. Who do you think made money there? I'm pretty sure the banks who floated the rumor, jacked price way up, then sold at favorable prices for a short.

This guy Pip Dog is right. This move actually had nothing to do with the PMI numbers. There is general risk aversion in global markets right now, and on this report, the banks used it to get short at great prices and make a fortune in about 3 minutes.

If you don't believe me, check UK Services PMI from Sept. The EXACT same thing happened there. A rumor of a low number ahead of time, it was a low number, then price immediately went the other way. Why? Huge buy orders coming into the market, another bonanza for the smart money. And don't kid yourself either. This WILL happen again, and why shouldn't it? With as much money as these guys made today, why wouldn't they do it repeatedly?

I lost money today like most people. But I also learned. A lot. I won't get caught with my pants down like this again...

 

[Forex69]

Sterling hit by erroneous trade and QE speculation | Reuters

Here it is a possible explanation of what happened today on GBPs at 4.28.