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Forex Signal (Tuesday November 22, 2011 – 8:30am EDT) – US Prelim GDP q/q

Discussion in 'Current Forex Trading Signals' started by Stavro D'Amore, Nov 21, 2011.

  1. Stavro D'Amore

    Stavro D'Amore Former FPA Special Consultant

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    Hello All,

    Today we have US Prelim GDP q/q results due at 8:30am, please find my trade plan and synopsis below.


    US Prelim GDP q/q
    Forecast 2.4%
    Previous 2.5%
    Pair to trade: USD/JPY

    Numbers we need:
    BUY USD/JPY 2.7% or Higher
    SELL USD/JPY 2.1% or Lower


    Economic Impact: High
    Typical Result: Good for Currency
    Occurrence: 60 days after the month ends
    Spike Probability: Good, we can see 30 pips on initial spike

    About our Triggers:
    US Prelim GDP is forecasted to arrive at 2.4%
    We are looking for a deviation of 0.3% either way on this trade.
    If we get 0.6% or better I will look to enter a Long position on USD/JPY and if we get
    -0.6% or worse I will go short on USD/JPY.
    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

    What is it? And why does the market care?
    While this is q/q data, it's reported in an annualized format (quarterly change x4). The 'Previous' listed is the 'Actual' from the Advance release and therefore the 'History' data will appear unconnected. There are 3 versions of GDP released a month apart - Advance, Preliminary, and Final. The Advance release is the earliest and thus tends to have the most impact.

    Gross Domestic Product (GDP) measures the annualized change in the inflation-adjusted value of all goods and services produced by the economy. It is the broadest measure of economic activity and the primary indicator of the economy's health.
    A higher than expected reading should be taken as positive/bullish for the USD
    A lower than expected reading should be taken as negative/bearish for the USD


    Method I use to trade this:
    Stavro D’Amore Trading Method
    I will look for a 30-50% 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 if you are using an ECN broker with auto clicker software or live news feed.

    Historical Chart and Data for US GDP

    All the best

    Stavro D’Amore
     
  2. Fxonuoha

    Fxonuoha Private, 1st Class

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    Goodness!
    No pre-news for this release...thanks Stavro,you're doing a lot.
    Can someone please help me out with retracement trading.
    I'm not yet about my wits with it.
     
  3. Sivamayam

    Sivamayam Recruit

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    Hi Fxnuoha


    Hi Fxonuoha,

    As Stavro wont have enough time to explain the same ,Mail me in sivaraj.t@gmail.com For more details on Retracement
     
  4. PipDog

    PipDog Corporal

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    News COMPLETELY Ignored!

    Talk about the News = Noise...

    Once again, the FX News was all but completely ignored in deferrence to the dominant market force....RISK!!!!

    Good luck if you got into a trade....
     
  5. matiplo

    matiplo Private

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    Originally Posted by PipDog View Post
    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.
    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?
     
  6. PipDog

    PipDog Corporal

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    It could. But in this current enviroment, I think it'd require more than just a day of stocks up. At this point, I don't see the market sentiment being swayed for the positive so easily. I expect some days up...but that won't change market sentiment. Look at the last couple of months. Look at indexes of the world...look at volume...look at the mess in Europe.

    Play it as it lies....
     
  7. Stavro D'Amore

    Stavro D'Amore Former FPA Special Consultant

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  8. Mini-Horse

    Mini-Horse Recruit

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