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My whole trading career has been evolutionary.
I have discovered a great way and I mean great way to trade the dollar index. I have been trading it here recently for that last several months.
It has been outright amazing how the dollar index works against the currencies.
Here's how it works. What you are looking at, the dollar index. The dollar index is comprised of a basket of currencies.
It's called a basket of currencies. The Euro, the Swiss, the SEK, the Canadian dollar, GBP, and the JPY.
Of course were not going to trade the SEK or JPY... The JPY is just way to much on sake
and the SEK has a good 20 pips spread. So we are not going to trade those. Now...
the amazing part that I have discovered. You see each one of these squares right here?
If you trade the 6 currencies or the basket of currencies all at the same time.
Each square is worth about 100 to 125 pips trading all 6 currencies.
The beautiful part about trading the dollar index is it is very sensitive to trend line breaks
which makes it very user friendly and simple to trade. The other thing that it is sensitive too and
it gives an idea right here. You see right here, this trend line break? Here the market is in a downtrend
and this is just a pullback, right here. Just a straight pullback, look I want to show you
what took place. Look at the dates everybody, this is 6/5... 6/6
and I traded this pullback right here and with just at a dollar a pip and look at how the Euro paid me 79 pips, the GBP
paid me 24 pips and the Swiss paid me 60 pips, Australian dollar
paid me 34 pips and the New Zealand dollar paid me 41 pips. Like an idiot I traded the JPY, I do not know why,
I hate that currency. I lost 28 pips and the Canadian dollar right here paid me 49
pips. A total of roughly 230 pips for the day. Now, see... trading a basket of currencies
(this is what I have learned also) it takes away the hero to zero mentality,
which means.. you know.. if you only trade one currency at a time, by the end of the day you either
lose or you win. And this takes away the hero or zero because of the different currencies
that you are trading. Your trading 6 currency at a time. Now look at this, I traded this
morning star and took the ride right up here, just up to here. Just following this trend
line, these bullish candles and got out of the first red candle and look at what it netted.
That was the 2nd day. It netted on 6/7 37 pips GBP, 18 pips Euro, 12 pips Swiss, 35
pips New Zealand dollar, 32 pips Canadian, 66 Australian dollar,
and that came out to a little over 200 pips. Just that move. Now what I want you to see, is that,
this is really great in trading fundamentals. I do not know if any of you have taken the fundamental class
but look at this fundamental. Here is this hammer on this fundamental as a matter
of fact I am just going to be really frank with you, this is non farm payrolls. Non farm payrolls
as of last Friday, what it did is it immediately dipped. One of the things I do is that I teach
how to trade fundamentals. Once it dipped and held its position then took out these
highs right here. I immediately got in. Now, when I got in, because it immediately dipped.
Now look it. I am trading 200k lots, which isn't a whole lot, but I immediately went into the red
a thousand dollars, which if I was trading, you know a dollar a pip. I would have gone
into the red... lets see... a dollar a pip.. 240.. I would have gone into the red
$45 dollars... would that be? roughly $45 dollars... but then look at how it started to come back from that hammer,
it took me back to 53 and look it how the New Zealand dollar began started to rally,
the US/Canadian dollar started to rally. The Australian dollar started to rally, the Swiss
frank didn't take off like ah.. Swiss frank didn't take off... GBP didn't take off and
the Euro didn't take off yet. But then, they started to take off. Look at how my account went
literally... literally in minutes to $889.54. Then it went off to $2,280. dollars
and then here is what took places. You got to remember, each one of these is worth 100 pips
Each mark is worth 100 pips. At the first sign on this bearish candle the market
pulled back a little bit. It pulled back, went all the way from 22 hundred dollars back down
to 11 hundred and 24 and then began to rally again and just this little rally allowed
me to get out at $2,232.00 for the day.