Ultimate truths - 2

"It's not where you get in, it's where you get out". I never really understood this axiom. What I have learnt is that there are places you just don't want to have a target:

1. Avoid the other side of a sessional extreme. This raises the risk considerably. I will turn down a trade if the market has to reach a new high/low to get to my target.

2. Before 15:00 GMT, avoid trading across a big figure. Ask George Soros OK. Large institutions may have large exotic options in play such as 'Double No Touch'. This means the option expires worthless if the currency pair trades through a high or low level. These levels are usually at a big figure. If the institution sees price approaching such a level, it will intervene in the spot market to move price away from it. This level therefore becomes an option barrier until expiry time at 15:00 GMT. You probably cannot live with this kind of market manipulation.

3. Don't exceed the Average True Range - ATR(14) - to get to the target. Again we are not looking for a new daily range in the same way we weren't looking for a new extreme in 1.)

Morty Sill
London