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Forex Signal (Thursday November 17, 2011 NY TIME 4:30am EDT) – UK Retail Sales

Discussion in 'Current Forex Trading Signals' started by Stavro D'Amore, Nov 16, 2011.

  1. Stavro D'Amore

    Stavro D'Amore Former FPA Special Consultant

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    Hello

    Please find attached UK retail sales news release

    UK Retail Sales
    Forecast -0.2%
    Previous 0.6%
    Pair to trade: GBP/USD
    Estimated Pips: 40 pips on initial spike

    The numbers we will look for:
    BUY GBP/USD at 0.2%
    SELL GBP/USD at -0.7%

    Economic Impact: High (will bring strong volatility)
    Typical Result: Good for currency
    Occurrence: Released monthly, about 20 days after the month ends

    About our Triggers:
    We will be looking for a deviation of 0.5 % to BUY GBP or SELL GBP/USD.
    If our deviation is hit, there is a strong possibility that the market will move 40 pips on spike immediately; there is a good chance that we will get a 30% retracement before entering if we miss the spike.

    What is it? Why does the market care?
    The Retail Sales is a monthly measurement of all goods sold by retailers based on a sampling of retail stores of different types and sizes in the UK. It is an important indicator of consumer spending and also correlated to consumer confidence and considered as a pace indicator of the UK economy.

    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

    Felix Descriptions:
    Indicator meanings

    Pre News
    There is no pre news for this release

    Spike Trading
    I do recommend spike trading as an option if you have an Auto clicker.
    Please use limit orders or bounds set to 15 pip entry

    After Spike
    I will look for a 30% retracement in the original spike before entering a trade; I will only enter spike if my triggers are hit. 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. I will also look for volume and MA indicators to decide if the spike is to reverse.

    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 expect to be in this trade for a total of 30 mins.

    Historical Chart and Data UK Retail Sales

    All the best

    Stavro D’Amore
     
    #1 Stavro D'Amore, Nov 16, 2011
    Lasted edited by : Sep 8, 2016
  2. matiplo

    matiplo Private

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    Did anyone get filled at this spike? In my case SNW clicked when BID of my broker was 1.5758, so it was before spike, even before opening of candle 9:30! (candle opened with BID 1.57604). I set very high slippage of 40 pips (just to check where I will be filled), so I could be filled up to ASK 1.5798. And I was filled at 1.57904.... nearly at the top of the spike... How was it with your broker?

    I don't know whether your broker show you only 1M candles and no single ticks, but I use Dukascopy for charting (not for trading) and on their chart the last dot (tick) before the spike is ASK 1.57618, and the very next tick is ASK 1.57915... I think it is simillar for all brokers, even if they don't show you single ticks....
    Does it mean that if there are no ticks in half of the spike, so there is simply no possibility of being filled well below 1.57915 (in half of the spike, let's say at ASK 1.5775) ???
     
  3. PipDog

    PipDog Corporal

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    News = Noise


    I've been doing this for some time, so I have perspective from years of news trading FX. There are times when trying to trade the spike seems to be a good method to lose money. This usually happens when the markets of the world are 'risk off'. I don't recall this ever being more the case than the present. Look at the stock market action on a daily basis...the markets will run up, then fall back. It appears they are topped out. Add to that the mess in Europe...

    I was looking for a shorting opportunity on this trade...going with the risk aversion. That means not taking a short positon against the USD...because that usually doesn't work out. Again, waiting for the news, hoping for a good number, then selling at the spike worked out. BTW...I sold a single lot at 1.5772 and bought it back at 1.5743. I was hoping for a bigger spike up on such a good deviation. Then went back to bed....

    There was little hope in making money on this trade by going long on the GU, either spike or retrace trading.

    Trading the news is more than just the news. You need to know the big picture.
     
  4. Boko Maru

    Boko Maru Sergeant

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    With regard to your fill price, and what prices might have been available to be filled at, I can share my thoughts. Not sure who you are using, but unless it's a fixed spread broker, there was probably a large spread increase right at the news? That alone might have accounted for the bad fill.

    But it's also just a matter of market liquidity. It does makes perfect sense that the ask would go from 1.5761 to 1.5791 in one tick at the news. Reason for that is everyone is buying (probably through automated programs and tools), and no one is selling (at least for a few milliseconds).

    So the second the news is released there are more orders to buy than there is liquidity to fill those orders. In this example, the offers between 1.5761 and 1.5791 get consumed in milliseconds (possibly by 1 very large order), and the 1.5791 price was the next available price to buy at. There was no opportunity to be filled between those prices; price just gapped those 30 pips instantly. In this case, there was no progression of prices moving 1 pip at a time from 1.5761 to 1.5791; it just went the whole distance in 1 tick for reasons above.

    So, the possible large spread increase, and/or immediate consumption of available liquidity, and voila, you have a fill near the top of the spike. Very common occurrence unfortunately. But all the more reason to use methods like Pip Dog's that he describes...

    Hope that helps...

    P.S. I did have an order to buy on this news, but it wasn't filled and I cancelled the limit right after (thankfully). I did make a couple of pips going long after the initial pullback in the first few seconds, but was probably fortunate not to take a loss (I exited quickly), as price obviously reversed hard.
     
    #4 Boko Maru, Nov 17, 2011
    Last edited: Nov 17, 2011
  5. PipDog

    PipDog Corporal

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    You Need Follow Through on Spike


    To spike trade successfully, you need follow through on the spike...for the news to drive the spike and then drive it some more. Or get a lucky good fill. When you run into the situation that you did...and every news trader trading the spike does...you end up buying at the top of the spike. All the more reason to understand market sentiment at the time of the trade. Risk Off, or, Risk Aversion generally supports USD strength...so going long on the GU is going against risk sentiment. Has you found out the hard way, this results in a spike, then a wicked reversal. If you trust that the news was good enough to drive the price action up again, you'd buy. And under risk on sentiment I'd bet that would be a good play. Unfortunately, this approach is statistically a bad move when risk aversion is driving markets.

    If you are going to spike trade in this enviroment, move your triggers out to higher deviations and trade with less leverage. Better yet, get a grasp of risk sentiment and use the news to set up a good entry to go with risk aversion.
     
  6. matiplo

    matiplo Private

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    Boko and PipDog,
    I really appreciate your answers and will think of them and refer later, but now it is quite late in Poland, so I only share the questions that came to me today...

    1. Do you know any free (or cheap) website/program from which I can take released data with maximum few seconds delay? In this approach I don't want to be filled at spike obviously; the key point is to have this data before retracement and try to trade retracement if possible (according to PipDog rules of retracement trading in risk aversion/appetite environment). I know https://www.fasteconomicnews.com/jtnselect.aspx I know Dukascopy news calendar... are there any other reasonable sources?

    2. Is the rolling (swap) procedure in the whole fx industry done in the same time? I mean: do you know any brokers that roll client positions earlier or later than others? By some seconds, by minute, by hour?

    3. In Dukascopy there is a great feature: Place Bid and Place Offer orders. Submitting these orders I behave exactly like a bank: They work for increasing liquidity pool. If I submit Place Offer 100k 1.4355, it appears in Market Depth exactly like offer provided by bank, and other traders may trade on my offer. Do you know other brokers with this feature (since I'm looking for even more fluent environment)?
     
  7. Boko Maru

    Boko Maru Sergeant

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    Hey matiplo; happy to help.

    For #2, I've always thought that rollover occurs at 5pm New York time everyday at all brokers, but to be honest I'm really not sure of that. It may be different with some brokers, but as I recall, all that I have traded with do it at that time.

    For # 3, you should be able to do this at any true ECN broker, and yes, it does increase the liquidity pool. You can even place orders between the spread to try and get a better fill. As for which brokers, I know MB Trading does that for example, but in my opinion they are not a good broker (terrible execution-I used to trade there on a live account). But again, you can do that at any real ECN.

    Ok, hope that helps :)
     
    #7 Boko Maru, Nov 17, 2011
    Last edited: Nov 18, 2011
  8. matiplo

    matiplo Private

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    OK, so this particular day all stocks were down (risk aversion) and "default" scenario was to short GU. Triggers were +/-0.6, and after data was released at +0.8 there was a short spike up, and then we could make money selling. Sounds beautiful.

    But let's imagine reversed situation:
    this particular day all stocks were up (risk appetite) and "default" scenario was to long GU. Triggers were +/-0.6, and after data was released at -0.8 there was a short spike down, and then we could make money buying?
    I mean: does it work this way in case of risk appetite scenario? Is risk appetite scenario completely symmetric to risk aversion, or maybe you prefer to trade risk aversion only? Would you buy in this case?
     
  9. matiplo

    matiplo Private

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    That's great you made some money on this trade. But you mentioned that the basic conditon of getting into risk aversion trade is to have the stocks down big at the release. I checked the history and calculated that on 17th November at the time of UK Retail Sales S&P daily change was +0.00% and FTSE was +0.25%... So very slightly positive, but not negative... Does it mean that nowadays, in strong risk aversion environment, we can perform risk aversion trade even if stocks are up a bit? And how much is this "up": if stocks are up +0.5% or 0.7%, should we still buy USD?
     

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