Page 127 - Ultimate Guide to Currency Trading

After placing the long USD/SEK trade, you then open up the "Modify Order" screen. You
should then observe the peak of the trading range. Remember, the SEK has been moving up and down
against the USD in a consistent up-and-down pattern that is range bound. If you program the
computer to take profit at just below the range-bound peak, you will ride the trade into the profit, all
while the U.S. and European markets are in turmoil.

In order to maximize your automatic trading and automatic profit taking, you would then
enter in a short USD/SEK order that is set to fill just above the point that the long order is closing out.
The momentum of the markets will allow you to have a trade that is long USD and capture profits
during the bad market conditions. This trade will then automatically close out at the range-bound
historical turning point. At this point your automated trading platform will fill a short USD/SEK order,
allowing you to capture the price movement of the then strengthening Swedish krona. This trade will
be held until the cycle will repeat itself.

Using Naked Trades to Trade Aggressively

You can also trade aggressively by trading naked. Trading naked is a method of going into trades
without any stop losses or take profits pre-programmed into the trade. In order to do this you must
first wait for the best time of the day: 6:00-7:00 P.M. eastern. At this time of day the trading will be
very light to nonexistent. Because of this, the limited orders of any size will greatly affect the market.
This is due to the fact that there are so few players at this time of the day: the New York traders have
gone home, and the Hong Kong traders are just getting to their desks. A little trading can go a long
way here. You can use your skills and margin to capture some wonderful profits. You can use a
combination of scalping and overnight trading to really get into some powerful price movements.

Again, the time to do this type of trading is when the markets are in a major reversal. Look for
the Asian markets to be way down, and the S&P 500 futures following suit. If the Asian markets are
down anywhere over 1 per-cent and the S&P 500 futures are down the same, then clear your trades
to get fully freed up on your margin and get ready!

The best way to begin is to get a calculator out and divide your margin into tenths. You will be
placing four trades over the next two hours that will total 40 percent of your margin. These trades will
be at the market, meaning you will get the prevailing price at that time. As the two hours pass, the
markets will begin to heat up. The traders in Hong Kong, Tokyo, and Sydney will begin to realize that
they do not want to be in risk-oriented trades. The same idea will be thought by early risers in Europe,
as well as the traders who, like you, are in the United States and are trading after dinner.

The best trade for this type of scenario is one of shorting a tried-and-true carry trade. One of
the best examples of a currency pair that will capture a contraction in the stock markets is the
AUD/USD. This currency pair has become the favorite of traders who want to capture big, predictable
profits in a market downturn.