Oops I did it again!

USDJPY has no range for today so I focused on cable. More risky, more spiky trades but the reward is sweet. I entered the BuyZone at 1.97005 and put my limit at 1.9715. Do you see the red candle? My limit hit and immidiately (less than a second) the price dropped to 1.9711 and then even to my entry point.

First minute I was in about -6 pips loss but I did not reverse or close because of overall cable trend. Also I look for EURO action as an indicator. EURO was up so I did not take my stoploss.

So I got my sweet 14.5 pips and was out quickly. I do not care the next candle is green.

Buy Zone or AAPLing the Juice

Buy Zone is the very simple trading setup based at classic breakout strategy with very small breakout straddle width. It was introduced by Avery The Rumpled One at http://www.kreslik.com/.

Originally it was used for trading AAPL and some other tickers at the beginning of the trading session. Avery says that the trading setup is "so easy as to wake up in the morning and to squeeze some apple juice". Sweet apple juice. Later Avery began to use this setup for currency trading at session open, i.e. Tokyo, Sydney, NY open breakout. Then he found that this seup can be used every hour not only session open. He traded GBP, EUR, but now he trades JPY only. Why? Because the comission for this pair is the lowest one, the spread is usually 0-1 pip, no sudden spikes as with GBPUSD. But Avery used Tradestation and he wrote all the indicators for it. So many traders asked somebody to code the BuyZone for Metatrader.

My small contribution for the BuyZone was writing the bz_everyhour.mq4 - so after that I inspired Avery and other pirate traders to code extra stuff for MT4.

So look at the right picture. The buy entry is when the price is within 2 blue lines. Opposite entry - 2 red lines. No stops - opposite entries (personally I do not reverse). You must begin to think about close and reverse whe price returns to hour open dash line. The takeprofit is ~6 pips, do not be greedy. The setup is very simple. Do you believe that "cool" indicators will help you to earn money? Trade the price but not indicators.

P.S. You can visit http://www.kreslik.com/ and download all the extra stuff and documentation for the BuyZone absolutely free.

Markets are driven by .....?

Forex market (as other financial markets of course) uses continuous double auction mechanism to match orders and execute trading. ECN-broker clients can easily understand this mechanism by looking their Market Depth/Level II window. They see that limit orders arrive every moment (continuous), there are Bid/Ask sides ( double ) , and they put their own limit orders to the order book at the appropriate price (so it is auction) .

There are many mathematic models of this mechanism and many research institutes try to build the theory of the market behaviour. One of the models is based at fact that every market participant is motivated by making profit and he(she) uses all his intelligence to make that profit - so the whole market is a perfect rationality and it is driven by very clever participants.

The other model is based at zero-intelligence market participants ( COMPLETE IDI0TS??? ). This model can be used to make strong predictions based on a compact set of assumptions, even if these assumptions are not fully believable.

So what is the conclusion? If zero-intelligence model is good one how do you feel when you give away your money to idiots? Do idiots know what the price will be the very next moment?
So never give your money away.