Trade Plan - DTS - Wed, Feb 6 2013 - Canada Ivey PMI 10:00am

Peter O

Special Consultant to the FPA
Hello Fellow Traders,

Here are Diamonds Trading Signal after-spike trade plan parameters for this release:

Canada Ivey PMI > Wednesday, February 6th, 10:00am NY time

Traded currency pair:USDCAD
Initial spike duration limit:15 seconds
Initial spike price action threshold:12 pips
Triggering retracement percentage:50 %
Retracement duration limit:60 seconds
Maximum trade hold time after release:15 minutes
Stop loss:10 pips
Take profit:10 pips
Max spread:2 pips

Trade plan for Diamonds Trading Signal:

  1. Set up single click execution on your broker platform, and if possible, pre-determine default stop/loss and default take/profit to 10 pips, so that when you click to execute your order, your platform will automatically set your stop/loss and take/profit at 10 pips from your entry price. Do not try this with brokers that don’t offer single click execution.

    If your platform does not allow to pre-determine default stop/loss and take/profit, then after entering the trade, simply set the stop/loss and take/profit points manually.

  2. Pull up either tick, 1-second, 3-second, or 5-second chart, and at 09:59:45am, so 15 seconds before the announcement, start paying very close attention to the price action of USDCAD on your chart.

  3. If between 10:00:00am and 10:00:15am, so during the first 15 seconds after the report, you see USDCAD move up or down by 12 pips or more, then enter in the direction of the initial spike at the very first 50% retracement, but only if your spread at the time of your entry is at 2 pips or less. Set stop/loss at 10 pips, and set take/profit at 10 pips.

    The retracement will happen within seconds. Don’t draw anything on your chart, and don’t try to get a perfect entry. As soon as you see approximately 50% retracement on your chart, compared to the initial spike, click to enter without any hesitation.

    If the move either up or down was less than 12 pips during the first 15 seconds, then the actual number of the report did not generate sufficient interest in the market, and you simply skip the trade. If your spread at the time of desired entry is more than 2 pips, then skip the trade.

  4. If by 10:15:00am, so 15 minutes after the report release, neither your stop/loss nor your take/profit points were hit, then close the trade automatically at market price of the time.

Previous Example: on November 5th, 2012, at 10:30:00pm, Australia Interest Rate number was released, so in the first 8 seconds, the price of USDCAD spiked up by 38 pips from 1.0369 to 1.0407. Then price started retracing, and within about 45 seconds retraced to 35% level of 1.0393. So you would BUY at 1.0393, set a stop/loss at 1.0378, and set a take/profit at 1.0408. 7 minutes after the report the take/profit was hit yielding 12 pips of profit, given that your spread at the time of the entry was at exactly 3 pips.

Be patient, and do at least 20 “second wave” trades, before getting frustrated and quitting.

Once you become good at it, you will be able to win on average 7 to 8 out of 10 trades.

Keep win to loss ratio at 1:1. Tweak it only after you are consistently profitable with 1:1.

Remember, it does not matter whether you make or lose 10 pips or 100 pips on a trade. What matters is how much money you make or lose on a trade. When risking 10 pips, simply put up 10 times more lots than you would when you risk 100 pips, and at the end you will make or lose the same amount of money. Yes, spread to pips targeted ratio matters, but these news “second wave” moves have such high probability of success that they somehow make up for the very high spread to pips targeted ratio (2 to 10), which is a small miracle in itself.

>> Go to see other trade plans for Wednesday, February 6th, 2013