Viable strategy?

dmt257 · May 12, 2011

Ive just read 'Beat the Forex Dealer' and came across an interesting strategy: the 'continuity trade'

It involves jumping into a trade in the market direction on a USD pair in the last few hours of NY trading on a Friday. It must have had a large move during the session. The trade is then closed just before the Toyoko open late Sunday.

I think the idea is that over this time the markets are thin and so price will simply continue in the prevailing direction. Expected return is 10-30 pips and high probability of success.

Anyone practice this? Used it before?

Fleming1 · May 13, 2011

Hi there , Very nice post to define the the strategy , I do agree about the price fluctuations and its effects on the Forex business.Its a nice information and keep it on.

Barramundi · May 13, 2011

dmt257 said:
Expected return is 10-30 pips and high probability of success.

And the expected loss if you get a limit move over the weekend. Don't forget to consider both sides of the equation.

pboyles · May 13, 2011

How can you close it if the market hasn't opened on the Sunday night?

Liquid validity · May 13, 2011

pboyles said:
How can you close it if the market hasn't opened on the Sunday night?

Or worse a black swan over the weekend - imagine japanese tsunami happened saturday instead of friday, and you were on the wrong side.
At best it would sting...

dmt257 · May 13, 2011

pboyles said:
How can you close it if the market hasn't opened on the Sunday night?

It opens 10 or 11pm Sunday. I forget which. Sydney session.

NVP · May 26, 2011

dmt257 said:
Ive just read 'Beat the Forex Dealer' and came across an interesting strategy: the 'continuity trade'

It involves jumping into a trade in the market direction on a USD pair in the last few hours of NY trading on a Friday. It must have had a large move during the session. The trade is then closed just before the Toyoko open late Sunday.

I think the idea is that over this time the markets are thin and so price will simply continue in the prevailing direction. Expected return is 10-30 pips and high probability of success.

Anyone practice this? Used it before?

not without a cast iron Guaranteed stop system and a broker that wont screw you :whistling

N

Adamus · May 29, 2011

This strategy sounds like the "One Night Stand" system first published by Joe Krutsinger and since published by Joel Rensink of infiniteyield.com.

My guess is that the profits can be good but the drawdown is bad.

The strategy exploits the fact that many dealers are off-loading to avoid overnight/weekend risk - so therefore using this system is the opposite - you would be profiting from taking on that overnight / weekend risk.

forker · May 29, 2011

Sounds like the strategy is designed to take advantage of the books being cleared at the end of the week.

Viable strategy?

dmt257

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Fleming1

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Barramundi

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pboyles

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Liquid validity

dmt257

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NVP

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Adamus

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forker

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