Some of the trades, or rather possible trades,discussed on Sunday did not get updated in the last post. The new CFTC rules governing Forex trading in USA were published, so I decided to devote a post to that. In a nutshell, starting October 18, maximum leverage on the major Dollar pairs will be 50:1 and on other crosses 20:1. Nothing truly damaging and quite achange from the proposed 10:1. Personally, I do not care, because my own trading does not include that high leverage. But the elimination of options available to traders is disturbing. Once again, it is the government “protecting” people from themselves. Who cares? If people want to blow accounts by trading at 100:1 or higher, let them. Well, it seems to be a done deal, unless, of course, some new provisions are added between now and the starting day.

Early week has been interesting, indeed. The emergency BoJ meeting took center stage and set the tone for currencies. The Bank of Japan expanded its loan program, a QE measure. As I wrote in Will BoJ ease policypost  ”That will be reflected in Yen and its crosses, but predicting how the JPY will respond to an event which might or might not happen is, at best, too complicated to be seriously entertained.” The Yen strengthened  on the announcement, not what most people expected, pushing all the crosses down in by a significant margin. These moves lasted through Tuesday, although seem to running out of steam about now.

Volatility was expected after the open, so I was looking for gaps. They formed, but fairly small. The only one large enough, if barely, was in AUD-JPY. After few hours, the price made a minor low, creating an entry point at 77.06. This point was broken after the BoJ announcement and a trade was on. It did not last very long, the small 35 pips target was reached fast. Interestingly, there was slippage and spreads held rather steady, too.

That post also covered a possible long trade in USD-CAD. Premise was to look for a trend continuation from Friday, and then buy it first sign or reversal. Unfortunately, the follow up from Friday was rather meek, not fitting into the pattern. Still, the trade was given a shot, but the price set into a sideways action and I closed it for 7 pips loss. Few hours later I tried another long, this time on a simple breakout and rode it to 100 SMA for a 50 pips gain.

Last week, the EUR-CHF gave signs of possible reversal. I bought at 1.3031, with a large, 300 pips objective. This pair made couple of run ups, trying to move lower, but the response to BoJ announcement spilled over to all CHF pairs. Swiss Franc acted as another “safe haven” and appreciated great deal. My trade was stopped out just under the low from 08.25. for a 71 pips loss. Since then, the EUR-CHF made another all time low at 1.2850.

Currently, I find did difficult to find trades that could be considered “suitable”. Markets are very nervous, well, not markets but the participants, which results in erratic moves. So, I sitting out a day, no trades on Wednesday. Do not feel comfortable right now and want to see more price development before new positions are contemplated. A day off. It is possible that the NFP on Friday will be the event of the week, but hope to be in action before that.

Mike K.