Picking a Trend

Everyday your first and most primary role as a trader is to pick the trend, this helps establish all of the criteria for your trades. If you get this wrong then expect loosers, so its important that you analyse all the fundamentals at your disposal to help in this decision process.

I feel lucky cause I always trade Asia and Europe sessions predominently and this can put you at an advantage and disadvantage. I say advantage cause normally the Asian session will start with a lead from Wall Street, if Wall Street is negative then chances are asia will start that way as well. This gives you a starting point.

The next thing that is important is that their will always be movements on FX prices at the end of the NY session and before the start of the Asian session, this is just professsional money squaring their positions and clearing their trades ready for the start of Asia. At GMT +10 Tokyo Sharemarket opens, this is the official start of the Asian day and this is when you need to pay attention. I watch for the following:

1. Commodity movements, especially where the price finished in NY and where its goes in early Asia
2. What happens with the local exchanges (Nikkei, Kospi, ASX200, CSI300 and Hang Seng), do they rise or fall.
3. How does risk appetite look, are some currencies weaker than others, what correlations can we see.
4. Hows the commentary, remember what I have said in previous articles about knowledge and being well read 'what's in the news'.

The next critical phase is when London opens, as everything you my have witnessed or read about in Asia depending on your time zone could be reversed, it happens all the time, so be alert and be ready to react, close trades if necessary to protect your position, remember that from 4pm Australian time (GMT +10) onwards the early europe session starts and positions will be squared up by the professional money you need to give this time to happen before taking a position and risk getting whipsawed out of it.

Once you have the trend then trading is simple support and resistance most of the time you really dont need anything else than this to make money.