Simple Trick Trade setup

In this post, i would like to cover very quickly about a simple trick that can be used to make a handful of extra pips with little or no stress.

This is what i believe happens in the market and you might not agree with what i have here, but it works for me time and time again. So try it for yourself and let me know what you think;

Intro : This is purely a fundamental trade setup. Not fundamental as to a news event but as to how the market forces work. As with companies, funds and banks, most of these forces pretty much control majority of the currency flows. Now, when they close for the day, and most importantly, close for the week, they have to close their books, liquidate their positions. At worst, they will at least hedge their positions. They will hardly ever leave positions exposed over the weekend. This order-closing and liquidating process will cause billions of dollars to change hands and possibly cause a directional trade setup

Condition : This has to a very one-sided market. As we know that the theme of the market has been USD strength for the last few weeks, there are many positions rallying on the dollar’s strength. Therefore, when positions are being closed for the week due to early profit taking or procedural practices, this will directly cause dollar weakness.

How to do it: We have to have a very strong, obvious, sentiment of the market. Only with such a bias, we can speculate on such movements. If there isn’t anything obvious or if we have mixed sentiments, don’t take such trade setups.

1) Watch for the last market of the last day of the week to be open. i.e. US market on a friday. Let the initial order flows happen on market open. Wait till Europe is pretty much heading home and US has come back after lunch, around 10am-1pm NY time. This is about 10pm-2am SG time(depending on DST)

2) During these hours, you will notice a stagnation of price(and a reversal candle if possible)

3) At this point, get in and have your stops just above the immediate previous low/high, this gives a rather tight stop loss which is good for us.

4) Once the orders move into profit, use a trailing stop to exit or just close your trades just before the market closes.

Let’s look at the charts to get a clearer idea;

Trend Reversals on market closing

Trend Reversals on market close

Though this may not be a major trend, you can;

1) Pick a few pips with little or almost no risk, if you don’t already have an open position.

2) Not look to continue in the trend direction as you know that this will reverse, if you already have an open position.

Challenges

1) You only trade this setup when the market is one sided and with a very obvious sentiment (read conditions above)

2) If you are in Asia, you have to be up till 5 am when the market closes!

Hope you liked this post. This is not something you learn off your technical studies or from expert analysis. It is with a simple understanding of how macro level forces work and chipping away at the market for whatever works.

Try it and let me know what you think;

Happy Trading,
Seeni

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