Spread Betting Forex I Series 1
Episode 1: USDJPY Bank of Japan Short
Summary
An introduction to the series, followed by a USDJPY short position based on Bank of Japan intervention and the possibility of Bank of Japan monetary policy change.
Key Lessons
Series expectations. This series will cover spread betting Forex and other financial markets using both fundamental analysis and technical analysis.
The spread betting account is a live trading account with IG Markets. All trades will be verified by sharing account statements and by taking the trades live.
I have a spreadsheet that will follow each trade, tracking each trades duration, reasons for entry and overall result.
Combining both fundamental analysis and technical analysis is powerful. Each trade taken in the series will use fundamental analysis for trade direction and technical analysis for entry and exit. Trading this way is powerful.
Have pre-determined take profit and stop loss areas. The USDJPY short position had a defined take profit and stop loss area before entering the trade. This is a crucial part of any trade - no trade should be entered before knowing your stop loss and take profit i.e. Your risk and reward.
If the fundamental analysis has changed, get out of the trade. Once I realised the Bank of Japan was not going to change monetary policy, there was no need to continue with the trade.
Fundamental analysis should provide your expected market direction. If the analysis has changed, then the market direction could change i.e. Close the trade.
Why hold onto a trade if the foundation of the trade has crumbled?
Result... WIN
You can watch episode 1 here: https://youtu.be/lnhyGh8JVWg You can open a free spread betting demo account with IG by clicking here
Episode 2: Credit Suisse Long
Summary
A long stock trade; Credit Suisse.
Based on technical support, an oversold RSI and fundamentally undervalued.
Key Lessons
Use financial statements. One of the best ways to value and fundamentally analyse stocks is to review the company's financials i.e. The profit and loss statement (statement of income) and the balance sheet (statement of financial position).
Don't hold consolidations. I didn't get the upside move I was expecting. Instead, price became indecisive and moved sideways. It's generally best to close a trade, if price is consolidating, especially if the position is in profit.
Result... Small WIN
You can watch episode 2 here: https://youtu.be/jQ4cdIjGx9w You can open a free spread betting demo account with IG by clicking here
Episode 3: TRYJPY Risky Long
Summary
A long term long position on TRYJPY, based on both technical and fundamental analysis
Key Lessons
Carry trades are worth considering . When swing or position trading, the swap rate can be a determining factor whether to take the trade or not.
Think outside the box. Trading exotic pairs can provide extra trading opportunities.
Exotic pairs can be volatile. Always consider potential volatility, especially against your position.
RESULT... Position still open
You can watch episode 3 here: https://youtu.be/sij9VkD3KtU You can open a free spread betting demo account with IG by clicking here
Episode 4: USDJPY Bank of Japan Short, Take Two
Summary
My second short position on USDJPY. This time by buying a USDJPY put option.
Key Lessons
Consider Forex options. Different financial instruments may be more suitable when taking some trades. In the video, I trade using a USDJPY put option instead of going short USDJPY. This allowed my to have no upside stop-loss with unlimited downside.
Result... Small WIN
You can watch episode 4 here: https://youtu.be/mME516d7EwE You can open a free spread betting demo account with IG by clicking here
Episode 5: USD (US Dollar Index) FOMC Long
Summary
A trade based on FOMC meeting minutes
Key Lessons
Take some profit. It's always best to take some profit when the position has moved in your favour. This can help you to still have a profitable trade, if price then reverses and hits a stop-loss at your entry area. Always remember to keep the majority of the trade open for as long as possible though.
Even fundamental analysis is not 100% reliable. Even after FOMC meeting minutes suggested USD upside, the actual bullish momentum was short-lived. Fundamental analysis can be as reliable/unreliable as technical analysis.
Result... Small WIN
You can watch episode 5 here: https://youtu.be/HE9u7o8XEwM You can open a free spread betting demo account with IG by clicking here
Episode 6: USDJPY Disinflation Short
Summary
A trade based on expected disinflation US CPI figures
Key Lessons
Options trading can prevent losing trades. Using a Forex PUT option rather than trading spot Forex prevented me from taking a loss i.e. my stop loss being triggered.
Let your positions run. My technical and fundamental analysis was both right - USDJPY became bearish. Leaving the position to run and maximising profits is crucial, after your analysis proves right.
Result... WIN
You can watch episode 6 here: https://youtu.be/gpEguI5Q4GU You can open a free spread betting demo account with IG by clicking here
Episode 7: GBPUSD Disinflation Long
Summary
A trade based on expected global disinflation
Key Lessons
Break of resistance can be better than support. When going long, waiting for a break of resistance can be a more reliable way of confirming a change of price momentum and trading a price reversal than buying at support. When going short, a break of support can be better than selling at resistance.
Don't jump the gun. Entry of trades based of the fear of missing out (FOMO), doesn't often pay off. Even experienced traders (I have been trading for more than a decade), struggle with managing trading emotions.
Result... WIN
You can watch episode 7 here: https://youtu.be/TkiC2LG-CWU You can open a free spread betting demo account with IG by clicking here
Episode 8: Trading the Russell
Summary
A trade based on expected global disinflation
Key Lessons
Consider trading a variety of markets. Even though this is a Forex trading series, I took a took based on equity future markets (the Russell). As traders, our aim is to make money. If this can be done by trading indices, commodities, or any other financial market, then it is worth doing - don't limit yourself to just Forex.
Combing fundamental analysis and technical analysis. The episode contains another great example of combining fundamental and technical analysis.
Risk to reward. Even though my position sizing wasn't as large as it should have been, I still stuck to my trading plan and ensured that a healthy risk to reward ratio was taken.
Result... WIN
You can watch episode 8 here: https://youtu.be/MTR_YR3cPmU You can open a free spread betting demo account with IG by clicking here