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Average daily trading strategy on the EUR/JPY

Discussion in 'Forex Discussions' started by painofhell, Dec 15, 2015.

  1. painofhell

    painofhell Content Contributor

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    Average daily trading strategy for EUR/JPY

    The average daily trading strategy consists of the special steps, including making an analysis, setting certain goals, placing orders, and making a trade. The feature of such strategy is that the trade depends on the analysis that you have carried out before and there is no need to be in front of your computer keeping track of the slightest price fluctuations after conducting a trading operation.

    This fact has very positive effect on a trader’s health. Forex is liquid and high-yield market; however, the potential loss of the capital is very high since the success of one market participant is provided by the failure of the other. The average daily trading eliminates the unnecessary emotions. The existing period of the opened position is from one to several days; but sometimes there are special cases when the deal takes several weeks, especially with low volatile pairs. The very convenient financial instrument for the average daily trading strategy is the EUR/JPY pair. The preparatory process for the deal, its conclusion and the waiting time are very exciting. Before making a trading decision on the EUR/JPY pair it is necessary to analyze the market (the related tools on the euro and the yen), in order not to make a mistake. The depreciation for a few days does not mean that the market becomes bearish since the reason for decline may be a correction or the arrival of a large investor trading volumes which move the price. As a rule, buying/selling a currency in huge volumes takes not one operation, but by portions creating misleading mood adjoined by many traders, mostly scalpers. The examples of such trades are very common; thus, in August 2008 there were about four similar situations with the EUR/JPY. Of course, for day traders it was an excellent opportunity; however for the average daily trading it was a false signal with the changes about 150-200 points, quite enough to trigger the stop loss. The average positions for this trading instrument are recommended: the deal volume should not exceed 20-30% of the deposit, while orders should be put at around 100 points, if you are ready to loose 20-30% of your deposit or less. For the EUR/JPY pair 100 points is a good size, though a lot of traders prefer to limit their losses at 50 points, and to be satisfied with the profit of 15-20 pips. In this case for the period of June-August 2008 the losses have exceeded the profit. The changes of the bullish market for June were 600 points; the corridor of July was about 200 points, with breaks in both directions; August difference was 800 points. That is why taking the trend into account, the stop order should be set at 80-100 points, and the profit at no less than 50 points; however amid optimistic forecasts it can be more.

    Before you enter a trade, you should determine the market direction; study the analysts’ projections; if possible find out the cause of the price change as it can be economically justified, for example, the decrease/increase of imports/exports in order to stabilize some economic indicators. If you do not expect any news releases in the certain period, i.e. reports or statements, you can make a deal. In this case only force-majeure circumstances can influence the price.
     
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