Example of FTM's Breakout and Momentum Methods on Non-Farm Payroll Night (2 October 2009)

It's always interesting on the day when US Non-Farm Payroll is announced (at 8:30am EST). The bar set for NFP to me was pretty high and in view of the ADP announcement made two nights ago, it is quite ambitious for the actual NFP number to beat the forecast (or even touch the forecast number). So, a negative 263K number with a 9.8% unemployment rate should be bad enough to cause the market to tank. Indeed, futures were sold off here immediately after NFP number was announced. When the cash market was open at 9:30am EST, it did pretty much the same thing.

Here is where a professional trader will do as opposed to an amateur. When everyone feels that it is bad enough, it's time to go for contrarian trading idea. When the number is bad, normally one will expect that people go long USD and JPY because it's logically sound. People are risk averse and hence they will go for risk aversion currencies. As professional trader, on the other hand, we are trading based on what we see and not what we think.

From my major 12 using Jimmy's Band (taught in FXTE's Trading Tactics Coaching Class), I saw that there was a reverse situation when USD and JPY were sold off instead of the other way. Hence, it's time to get ready to do some long trade against USD and JPY. So, I used Jimmy's Band to identify the pairs I am choosing. USD/JPY was going up, and hence it is logical to choose Yen pairs to go long to achieve a better bang for the buck!

Breakout Method

Here is the FTM Breakout Method on EUR/JPY 30 min chart.


The set-up bar was formed at 10:00am EST, and we would enter a long EUR/JPY based on FTM Breakout method at 10:30am EST. By following this simple trading method, we would have easily made 90 pips within 30 mins which is US$900 on a standard lot.








Momentum Method

Now, let us look at another trade using FTM's momentum method. Again, the idea originated from Jimmy's Band as discussed above. The following is a 15 min chart on GBP/JPY and a set up bar was formed at 12:45pm EST and we would go long on GBP/JPY at 1:00 pm EST. The tricky thing is that it was a Friday night and the European Market was closed at that time. Hence, there was some internal conflict to choose a longer than hourly time frame to trade. Therefore, scalping using a 15 min chart made perfect sense in this situation.

If one were to study the FTM Momentum method closely, he could argue that this set-up bar was not really a set-up bar. In my opinion, it is true if we strictly follow the method. However, this is where the flexibility comes into play as a professional trader. Isn't a set up for Forex Nitty Gritty's method? Yes, indeed. Can we combine FNG and FTM's Momentum method here? Yes, we can. So, here is my answer.

So, a nice 25-30 pips within the next 15 mins were made. If one followed closely, there was a proper set-up bard at 2:00pm EST using strictly the FTM momentum method. Well, by that time, I went to bed and sweet dream. Hence, leave it to folks who could stay up. Trading should be less stress exercise and thus, if we can't trade at that time, then do something else.