3:00 PM EST

NZD Official Cash Rate – Interest rate at which banks lend to other banks.

NZD/USD

Note:  Watch out for a spike before the OT gets the data.  If you see this, turn off the OT immediately.

The rate is currently 3% and is not expected to change.  It appears economists are largely in agreement on this.  I will set up the Oracle Trader with a .25 safe trigger and trade full lots.  If it hits the trigger, we should see at least a 70 pip spike.  I will also trade the Straddle but will be quick to exit in the likely event it comes out as expected.  If the pair is jumpy before the release, you could move your buypips and sellpips up to 6 or 7 to reduce the odds of getting taken in prematurely.

7:30 PM EST

AUD Employment Change – Change in the number of employed people during the previous month

AUD/USD

Note:  Watch out for a spike before the OT gets the data.  If you see this, turn off the OT immediately.

This can be a great trade and is really the best opportunity for profits this week.  Both row 1 and row 2 matter.  A look back tells us that in September, it came out at -5.9 and .1 (below our triggers) with a spike of 17 pips.  Nice spike for such low numbers.  In October, it came out at 29.5 and 0, with a spike of 40 pips.  I also tried the AUD/CAD on this one but barely broke even on that pair so this was not a good idea.  Otherwise it was a good trade and the AUD/USD did very well.  In November, however, we had some craziness.  The data came out at 9.7 and .4.  The .4 was the opposite direction of the 9.7.  There was a spike up of 40 pips 5 seconds before the news was due out.  The row 1 data came out as a buy but it didn’t really move up any more because it already moved far enough.  Then row 2 came out as a huge sell.  .4 on row 2 is enormous.  There was a large spike down due to this. I turned off the OT and the Straddle when I saw the 40 pip spike come out so far in advance of the scheduled news time.  The Straddle had not entered the stop orders at that time.  Clearly there was a leak or some anticipation of direction.  This is a risk with these AUD and NZD trades.

I will use 15 medium and 20 safe on row 1, and .2 medium and .3 safe on row 2 on the Oracle Trader for this one.  Will trade 1/2 lots for the medium and 3/4 lots for the safe.  Watch out for premature movement and be prepared to click out.  Also will use the Straddle with a maxspread of 6, and buypips and sellpips at 6 also.  Spikes before the news are OK for the Straddle as long as they happen AFTER your 2 stop orders show up, which you should try to make happen about 3 seconds before the scheduled time of the release.

Dustin does not trade the AUD releases in the trade room primarily because of what happened last month.  These have an extra element of risk because of the increased likelihood of this.  However, last week we did real well on the 2 AUD releases.  Lots of money can be made if you are aware of what might happen.  The occasional craziness does not bother me.  In fact it makes for good post-trade conversation (admittedly small consolation if you lose).

Good luck!

GBP Manufacturing Production – Change in the total inflation-adjusted value of output produced by manufacturers

GBP/USD

This has really not done much in the last 3 months.  Four months ago it came out at -.6 and spiked 20 pips.  I have been doing .6 medium and .8 safe on the Oracle Trader. Do not try the Straddle on this because it rarely moves far enough to justify that.  Trade conservatively.

9:00 AM EST

CAD Overnight Rate - Interest rate at which major financial institutions borrow and lend overnight funds between themselves

USD/CAD

The economists are in agreement that the rate will not change.  If it does, you should expect a 70 pip spike.  On the Oracle Trader use .25 for a safe trigger and trade full lots.  You can try the Straddle on this also but I would set buypips and sellpips to 7 and a maxspread to 8.  Be quick to Remove it if the data comes out at 0, which is highly likely.

AUD Cash Rate - Interest rate for overnight money market deposits

AUD/USD

This can be a really good trade when the economists differ on whether they think the rates will move or not.  This month, the economists are in agreement that rates will not change.  I will use a safe trigger on the Oracle Trader of .25, and will trade full lots.  In the unlikely event rates change, we should see a minimum of 70 pips on the spike with good continued follow through.  I will trade the Straddle also, setting buypips and sellpips to 8 (in order to reduce the likelihood of getting taken on the pre-news jitters) and a maxspread of 6 on the AUDUSD.

Last week, the best trades were the AUD GDP q/q and AUD Retail Sales, and also the US Non-farm payroll.  The AUD GDP hit our OT triggers on row 2 and also took in the Straddle.  We did very well on both.  The AUD Retail Sales hit the row 1 trigger and also had a huge spike.  Both OT and Straddle also did well on that one.  With the US NFP, I was trading the USDJPY on the Straddle and the spread grew to 8, but my maxspread was 5 so I didn’t get in there.  Did get in on the OT on row 2 and did well there.  Some friends that were trading the EURJPY got in on the Straddle, because the spread evidently didn’t change on that one, and did extremely well.

On the down side, I got taken in on the GBP Services PMI which went just far enough to take in one of the Straddle orders on the pre-news noise.  Lost a few pips on this one, plus got up at 4 in the morning to do it so it was particularly painful.  Also had bad luck with the CAD Employment trade, which is normally one of the best.  Row 2 came out with a huge deviation but didn’t seem to have much impact at all.  Plus one of my Straddle orders got in on this mess.  I took losses of a few pips on those 2 trades.

All in all, it was a very profitable week for me.  I made much more on the AUD trades and the NFP than I lost on the others.  That is the object of what we do, minimize losses (which you will always have) and maximize profits.

This coming week I will trade the following trades.  I will label Trade Room trades with LOTN (Live On The News).

12/6    10:30 PM EST – AUD Cash Rate

12/7      4:30 AM EST – GBP Industrial Production (LOTN)

12/7      9:00 AM EST – CAD Overnight Rate

12/8       3:00 PM EST – NZD Official Cash Rate

12/8       7:30 PM EST – AUD Employment

12/9       7:00 AM EST – GBP Official Bank Rate

12/9       8:30 AM EST – US Unemployment Claims

12/10    8:30 AM EST – CAD Trade Balance (LOTN)

12/10    8:30 AM EST – US Trade Balance (LOTN)

That’s it.  Not a ton of opportunity this week so we will be careful.  The interest rate trades, of which there are 4 this week (called Overnight Rate, Cash Rate, Bank Rate, etc.), can move the market 100 pips or more when they hit, but they rarely hit.  Remember, we do roughly the same trades every month so having a week with not so many big ticket trades is not an issue, since there are the same number of potentially good ones every month.  And sometimes we do well on ones that don’t typically have big moves.  Check out my daily posts to get the details of the trades coming up the next day and how you should trade them.

Tomorrow we have some good opportunities.  There are 4 trades; a couple good, one great, and like last week a cool down trade to help us recover from a potentially wild morning.

4:28 AM EST

GBP Services PMI -Level of a diffusion index based on surveyed purchasing managers in the services industry.

GBP/USD

Note:  This data will be released at 4:28 AM, not 4:30.  The Oracle Trader might not get the data for a minute or two after the spike.  It is released to one data provider well before all the rest.  This means that typically we will see movement in one direction, and then when the data shows up in the OT (the rest of the world gets it), we see a continued move in that direction.

I started doing this trade recently but a friend has been doing it for quite some time and doing well with it.  Last month it came out at .6, moved far enough to take the Straddle trade in and get it up about 8 pips or so, retraced back to 0 (taking the Straddle trade out), then moved 50 pips in the original direction over the next 10 minutes or so.  I will NOT trade the OT but will set it up and put triggers of 2 and 2.5 in it.  The purpose of the OT is to let you know what the deviation actually is and when the rest of the world knows that.  The move will have already started by then.  Trade the Straddle with a maxspread of 6 on the GBP/USD.  If one of the Straddle trades does not go live within a second or so after 4:28:00, get rid of them both by Removing the Straddle.  If it does go live and you are up 10 or 15 pips, it will not likely retrace all the way back before the visible data comes out and you will likely get an additional push in the correct direction.  Last month we did not get enough of a spike to keep us from getting caught by the retracement but this was because it turned out the deviation was only .6.  If you barely get in but aren’t up at least 10 pips, you can assume that the data will not have a big deviation.  Hope this makes sense to everyone.  I would trade 1/2 the normal Straddle lots on this.

7:00 AM EST

CAD Employment Change – Change in the number of employed people the previous month.

USD/CAD

This has traditionally been a swing-for-the-fences trade.  Even though there are 2 rows of data with this trade, they almost always come out at exactly the same time.  Their estimates have gotten better on this trade recently, unfortunately, probably because of the depressed economy.  A quick look back tells us this.  In September it came out at 5.8 and .1 (the .1 was in conflict with the 5.8).  It spiked 39 pips in the row 1 direction, then did a bit of retracing.  In October we got  a -16.6 and 0 deviation, with a spike of 35 pips.  This retraced over time most of the way back after the initial spike.  In November it came out at -12 and -.1 (row 2 was in opposition again).  The spike was 24 pips but it whipsawed. Glad not to have been in.  The expected value for this is 17.9k jobs.  I will use triggers of 18 medium and 23 safe on row 1 (up from 15 and 20 in the past) and .2 medium and .3 safe on row 2.  I think if we get a deviation above 17.9, we will have a good move.  We are of course looking for both rows to come out in agreement.  One issue I have noticed lately is that the spread on the USD/CAD frequently grows to 10.  If you choose to set your maxspread to 10 on the Straddle, lower your lots.  If we get a huge deviation (greater than 25 on row 1 and/or greater than .2 on row 2), we will get a 50+ pip spike and the 10 pip spread will be irrelevant, but this has not been happening lately so there is additional risk.  I would trade 1/2 lots on the medium and full lots on the safe.  I will probably set my maxspread to 10 on the Straddle but trade smaller than usual.

8:30 AM EST

US Non-Farm Payroll – Change in the number of employed people during the previous month, excluding farming.

EUR/JPY or USD/JPY

This is a trade that can make or lose a bundle and tends to be really volatile.  Research shows us: In September it came out at -51 and 0, with a 40 pip spike and moves of 125+ pips over 30 minutes.  Wow great trade!  In October it came out at -90 and .1 (row 2 in opposition).  It spiked 15 pips, retraced hard on the row 2 data, and whipsawed all over the place for awhile.  Wow terrible trade!  In November it came out at 91 and 0, with a spike of 26 pips, full retracement, and then continued movement in the right direction.  Wow uneventful trade!  This thing is all over the place, and prone to revisions that can come out at any time after the data is released.  I am beginning to think after looking at this that we are better off trading row 2 only, and using .2 medium and .3 safe for triggers on the Oracle Trader.  The thinking is that if we get a .2 or .3 on row 2, we should get a big enough push in our direction that we will have time to exit the trade in the event row 1 comes out in the opposite direction, regardless of which row comes out first.  Never tried this strategy on this one before but this is what I will do tomorrow on this trade.  We have had huge deviations on row 1 lately with minimal moves.  A 90+ deviation on row 1 should cause a 100 pip spike, but it doesn’t any more.  I will trade 1/4 my normal lots.  I would avoid the Straddle on this because it gets too volatile and you are too likely to be taken in before the news comes out.  If you insist on trying it, trade the USD/JPY with a maxspread of 6 and trade very conservatively.  Might want to set your sellpips and buypips to 8 just to reduce the likelihood you will be taken early.

10:00 AM EST

US ISM Non-Manufacturing – Level of a diffusion index based on surveyed purchasing managers, excluding the manufacturing industry.

USD/JPY

I would only do the Straddle on this.  Set the Oracle Trader with a safe trigger of 3 but don’t point it at anything.  Set the maxspread to 4.  Trade very sparingly.  When you see the data come out, if you are not in, Remove the Straddle and get rid of your pending orders fast.  Did I mention to trade very sparingly?

Good luck.  It promises to be a wild day.

EUR Minimum Bid Rate - Interest rate on the main refinancing operations that provide the bulk of liquidity to the banking system

EUR/USD

Sorry I am so late getting this one out.  These are cut and dry trades.  There is not much reason the EU will change the rate at this time.  The OT safe trigger is .25.  There is no medium trigger.  If it hits, the spike will be 70 pips and you will get 100 – 125 total pips out of it over the first couple hours.  The odds of it hitting are almost 0 so don’t get too excited about it.  You can set your lots to the full amount you trade.  Don’t trade the Straddle on this because the market tends to get too jittery before these trades and you will likely get taken in before the news.  There are interest rate trades we will trade on the Straddle but not this one.

US ADP Non-Farm payroll - Estimated change in the number of employed people during the previous month, excluding the farming industry and government

EUR/JPY

This has not been the most dependable trade.  In September, the deviation was -25 and we had a 23 pip spike.  This was a decent spike for a small deviation.  In October the deviation was -59 and we only had a 30 pip spike, and to make matters worse the data came out late to the OT so we were filled at the bottom (wasn’t paying attention and didn’t turn off the OT before it entered me).  In November the deviation was 23 and the spike was a paltry 5 pips.  I will try the Oracle Trader with a medium trigger of 50 and a safe of 75.  Will trade 1/5 lots on the medium and 1/3 on the safe.  I would not try the Straddle with this since the spikes are so inconsistent.

10:00 AM EST (This is a Trade Room trade)

US ISM Manufacturing - Level of a diffusion index based on surveyed purchasing managers in the manufacturing industry

EUR/JPY

In September this came out at 3.6 and 6.2 on row 2.  The spike was 40 pips.  It was a great trade. In October there was no appreciable deviation and no movement.  In November it came out at 2.9 and 1 with a spike of 20 pips but a fast retracement to 0.  I will try 2.5 medium and 3 safe on the Oracle Trader and assume we will get better movement than we did last month if it hits that.  Go in with 1/4 lots on a medium and 1/3 on a safe.  I will try the Straddle also but will be conservative on the lots because of the inconsistent spike.  I will use a maxspread only a pip or 2 beyond the normal spread on the EUR/JPY.

7:30 PM EST

AUD Retail Sales - Change in the total value of sales at the retail level

AUD/USD

In September this came out at .3 and spiked 14 pips.  In October it came out at -.1 and only spiked 4 pips.  In November it came out at -.2 and we got a 20 pip spike.  Every month there is another piece of data that comes out at the same time.   It is either Building Approvals or Trade Balance.  This month it is Trade Balance.  I wouldn’t pay too much attention to this, particularly if it comes out first.    I will trade .5 medium and .7 safe on the Oracle Trader, going in with 1/3 the normal lots on a medium and 1/2 lots on a safe.  If you are in and the Trade Balance comes out against you, it might be a good idea to close out.  Also watch for revisions on the Trade Balance and exit your trade if there is a big revision.  On the Straddle, I will go with a maxspread of 6 on the AUD/USD.  I would prefer a sell on this thing but either way should work out fine.  If we get a huge deviation like .9 or so, hold onto part of your trade for awhile and see if we get some good follow through.

CAD GDP q/q – Change in the inflation adjusted value of goods and services produced by the enonomy

USD/CAD

This would be a good mover if it hits, but it has not hit in awhile.  The last 2 months it came out at 0.  In August, it came out at 0 and -.5 (on row 2) and spiked 33 pips.  On the Oracle Trader, I will try a .2 medium and .3 safe on row 1, and .4 medium and .6 safe on row 2 (CAD GDP Annualized q/q).  Use small lots on the medium, maybe 1/4 the normal lots, and 1/2 lots on a safe.  If you use the Straddle, use a maxspread of 5 on the USDCAD and be ready to Remove it immediately upon release of the data.  Trade light on this as well.

10:00 AM EST

CB Consumer Confidence - Level of a composite index based on surveyed households

EUR/JPY or USD/CHF

This is also not a great trade.  It hasn’t deviated much in the last 3 months.  On the Oracle Trader I will use 6 medium and 8 safe on the EUR/JPY.  Trade 1/4 lots on a medium and 1/2 lots on a safe.  Don’t trade the Straddle on this one.

7:30 PM EST

AUD GDP q/q -Change in the inflation-adjusted value of all goods and services produced by the economy

AUD/USD

This is a better trade than the last two.  In August it came out at .3 and .5 (on row 2), and we got a 31 pip spike.  On the Oracle Trader, I will trade .3 medium and .4 safe on row 1, and .4 medium and .6 safe on row 2.  I will trade 1/2 the normal lots on the medium and 3/4 lots on a safe.  Watch out for a spike BEFORE the data comes out on the OT.  This happens from time to time on the AUD releases.  If this happens, click the Off button the split second you see the spike on the tick chart.  In August, row 2 came out first and caused most of the movement.  As with most AUD trades, the spike is not usually huge but the follow through movement afterwards can be substantial.  If it is a sell and hits our safe triggers, you might want to close 1/2 your trade and hold the other half for awhile.  On the Straddle, use 6 maxspread on the AUD/USD.  With the Straddle, you don’t care if the spike happens early, only that there is a spike.

11/30   8:30 AM EST – CAD GDP m/m (LOTN)

11/30   10:00 AM EST – US CB Consumer Confidence (or lack thereof)

11/30   7:30 PM EST – AUD GDP q/q

12/1      8:15 AM EST – ADP Non-Farm Employment Change

12/1    10:00 AM EST – ISM Manufacturing PMI  (LOTN)

12/1      7:30 PM EST – AUD Retail Sales m/m

12/2      7:45 AM EST – EUR Interest Rate

12/3      4:30 AM EST – GBP Services PMI

12/3      7:00 AM EST – CAD Employment Change  (LOTN)

12/3       8:30 AM EST – US Non-Farm Employment Change (LOTN)

12/3    10:00 AM EST – ISM Non-Manufacturing PMI

There are a few good ones buried in here so hopefully we will start getting some good deviations and come out of the week with some nice profits.  This has been the least active Fall I can recall, but it looks like things are creeping back economically so we should start having some fits and starts soon, which will provide us with some good trades.

One other note; as a consequence of the relative inactivity in the markets over the last month or so, many traders will get the urge to manufacture trades, or in other words, trade with lower triggers, trade too many lots,  or try trades that have historically not provided much movement.  These traders will suffer losses and then when things start moving again will need to offset all the losses before being able to take advantage of opportunities for profit.  We all get this urge but it is a losing proposition.  Based on many years of experience, we have got a methodology that is proven and consistent, maximizing profits and minimizing losses.  We need to execute that methodology consistently and deliberately.  The trades will come, we just need to be patient and wait for them to come to us.  This is particularly tough for me to say because I rely solely on trading income to pay the bills, but I have succumbed to these urges in the past and paid the price.  There is clearly no benefit for me to tell you to stay out of trades.  I just don’t want you to make the same mistakes I (and many of my friends) made.  I will surely remind you of this again in the future, but thought that given the snail-like markets we are looking at these days, it warranted a mention.

Now, for tomorrow we have:

4:30 AM EST

GBP GDP q/q Revised – Change in the value of all goods and services.

GBP/USD

This is a quarterly release and is the second in importance of the 3 GDP releases.  In May it came out at 0 and 0 (2 rows of data) with no movement.  In August it was .1 and .1, with a small 9 pip spike and immediate reversal for 30 pips the other way.  Ugh.  Given the situation we find the world in, I will bump my triggers to .3 medium and .4 safe on the OT trading 1/4 lots on a med and 1/2 on a safe.  Will use a maxspread of 5 on the Straddle and trade lightly.  If this hits our triggers, and we get a Sell (a negative deviation), you might want to hold the trade for a few extra minutes due to the heavy pressure down on this pair, or at least close 1/2 and hold the other half.  If it is a buy, I will get out fast.

8:30 AM EST

US Durable Goods – Change in the total value of new purchase orders placed with manufacturers for durable goods, excluding transportation.

EUR/JPY or USD/CHF

This doesn’t often deviate enough to hit our triggers but it did in August.  It came out at -4.3 and -2.7, with an anemic 15 pip spike.  No meaningful deviation since.  Again, due to world conditions I would be real cautions with this and particularly if it is a Sell.  Given the August price action, I would recommend 4 medium and 6 safe on the OT, trading 1/5 your normal lots on a med and maybe 1/3 on a safe.  If it is a Sell, get out fast.  For a Buy, you could close 1/2 your trade immediately if you are above 20 pips positive and hold the rest for a bit to see if we get any follow through.  Otherwise close the whole thing and hopefully you got enough to buy your turkey dinner.

This will be the last trade for the week.  For those that celebrate it, I hope you all have a peaceful and happy Thanksgiving.

Barry