Forex Technical News

EUR/USD

After a strong rally over the last few days, the pair is finally seeing some downward correction with some room for the trend to continue. Looking at the daily chart, a breach of the upper Bollinger Band is evident with the RSI for the pair floating in the overbought territory. A bearish cross is evident on the 4 hour and 8 hour chart's Slow Stochastic. Going short with tight stops may be preferred for the day.

GBP/USD

The pair is currently range trading between 1.5630 and 1.5690 with most indicators in neutral territory. The RSI for the pair floats near the overbought territory on the 4 hour and daily chart indicating some downward movement may still be expected from the pair. Going short with tight stops for the day may be advised.

USD/JPY

After a strong downward move some correction may be expected for the pair as the RSI is floating in the oversold territory on the 4 hour and 8 hour charts and a bullish cross is evident on the 8 hour chart's Slow Stochastic. Going long for the day may be a good option.

USD/CHF

A breach of the lower Bollinger Band is evident on the daily chart with the RSI for the pair floating in the oversold territory on the 8, 4 and 2 hour charts. Furthermore, a bullish cross is evident on the 8 hour chart's Slow Stochastic. Going long with tight stops may be advised for the day.

AUD/CAD

After a long bullish run, some correction may be in store for the pair. A bearish cross is evident on the daily chart's Slow Stochastic with the RSI for the pair floating in the overbought territory on the 4 hour, 8 hour and daily charts. Moreover, a breach of the upper Bollinger Band can be seen on the daily chart, indicating an imminent downward move. Forex traders are advised to go short for the day.

Forex Tading Tables

There are many trading systems out there in the market. As Sam mentioned in his post at forextradingzen.net

If you’re trading somebody else’s system, when something goes wrong, all you can do is get mad at them – you’re powerless to actually do anything about it.

So, the following are some of the things I recommend, when you are looking for a trading system or when you are developing your own trading system.
1:1 Risk Reward Trading Systems:
Let’s say your trading system is a 1:1 Risk Reward trading system. This means for every X number of pips you are risking you are aiming for the same X number of pips. In this case your winning to losing trades ratio should be >1. This can be per week or per month.
I will explain this using the following example.
Your system requires 10 pips stop loss and the take profit level is 10 pips. Let’s say you are doing 10 trades per week and number of winning trades are 5 and losing trades are 5.
In this case the total profit per week is “0” pips. So in the case of 1:1 Risk Reward systems your winning to losing trades ratio should be >1.

1:2 (or more) Risk Reward Trading Systems:
If the profit of your trading system is two times than the loss you are risking your winning to losing trades ratio can be <1. Let’s say your system requires 10 pips stop loss and the take profit level is 20 pips. That means for every 10 pips you are risking you are aiming for 20 pips profit.

As you see from the above example when the risk to reward ratio is 1:2, with 4 winning trades and 6 losing trades you are still in 20 pips profits. That means the winning to losing trades ratio is 0.66. If the winning to losing trades ratio is 1 you will be in a profit of 50 pips.
So for a 1:2 risk reward trading system, I recommend the winning to losing trade ratio of at least 1.
2:1 (or more) Risk Reward Trading Systems:
I don’t normally recommend this kind of trading systems as the winning to losing trades ratio should be much greater than one. In this case you are risking 2X number of pips for every X number of pips you are targeting. Check the following example.

As you see from the above example you should have the winning trades more than double the losing trades to be in profits.
Conclusion:
Aim for trading systems with

1. 1:1 Risk Reward Trading Systems with Winning to Losing Trades ratio of >1
2. 1:>1 Risk Reward Trading Systems with Winning to Losing Trades ratio of at least 1.