Written by Barry Battista
Thursday, November 4th, 2010
There are 2 trades tomorrow worth consideration; one is fantastic and one can be a bit nerve wracking
7:00 AM EST
CAD Employment change – The net change in the employment roles for the previous month
USD/CAD
This is an outstanding trade. It hits our safe trigger frequently and we have seen some huge moves out of it. Last month the deviation was -16.6, which hit our medium trigger. It spiked 35 pips before retracing most of the way back. For the Oracle Trader I would use 15 medium and 20 safe. You can trade 1/2 lots on the medium and full lots on the safe. If the actual deviation comes out less than about 25, I would close the trade or most of the trade once it starts to retrace more than a few pips. If we get a deviation over 25, you might want to hold out for a retracement and then another push in our direction. For the Straddle, use a maxspread of 8. It is rare that we have late data issues with this trade but be aware of it anyway. It is possible we could get deviations north of 50 on this thing and spikes in the 50 to 60 neighborhood. Course we could get a deviation of 5 and no movement at all, but that doesn’t happen very often.
8:30 AM EST
US Non Farm Payroll – The net change in the employment roles for the previous month
EUR/JPY
This is a risky trade that can create much anxiety. On the Oracle Trader I usually go with 65 or 70 for safe on row 1 and .2 for safe on row 2, but be advised that no trigger is really safe on this because the revisions to the prior months data can be huge. Last month it came out at -90 and .1, spiked only 15 pips with the row 1 data before the row 2 data came out in opposition. Whipsawed. I got out for a couple pips loss. The month before it came out at -51 and 0, spiked 40 pips, and continued on the EUR/JPY for 125 pips in 5 minutes. So … this can be your friend or your enemy. Trade lightly on the lots. If you are going to do the Straddle, use a maxspread of 8 and set the buypips and sellpips to at least 15. This is important to keep you from getting entered in the pre-trade insanity. If there is a big run, you will do OK but if there isn’t it will give you time to bail. Obviously trade lightly here too.
Note: I am going to an annual .. uh .. event that I attend that starts at 8 AM EST (and runs for 2 days) so I will miss this trade.
Good luck…..
