Trading Futures and ForexMarket Volatility Report for trading futures and forex during market reports and market openings identify the “how much” factor in price movement.  Most traders erroneously believe that trading futures and forex successfully is all about the markets, timeframes, indicators, and/or a particular strategy.  Actually, successful trading is all about numbers.

Trading Futures and Forex – Understanding the Numbers Using the Market Volatility Report

Knowing the effect a particular market report — makes a difference between being in the market or standing aside because the volatility is so extreme that your stop can be jumped over.  Of course, if you are on the winning side, then great.  But, on the other hand, if you are on the losing side, it’s painful.

For example, I was in a trade on the GBPUSD last Wednesday (Services PMI).  The average market movement for that report is 34 pips.  The average range from 4-5 am (EDT) is 30 pips.  Since I was trading the 45 minute chart, I knew that it may cause a bump in my trade but that would be it.  However, on Friday, the Non-Farm Employment numbers came out at 8:30 am (EDT) and I knew not to be in that particular trade because the average number of pips on that particular report is 64 pips (extreme volatility) because the typical range for 8 to 9 am (EDT) is only 26 pips.

Realistic expectations – how do you know if your profit target or stop is realistic?  How do you gauge where to place a stop or profit target?  I don’t play guessing games and I know that if I am trading on average below a 1 : 2 risk to reward ratio, then I will decrease my account.  The numbers prove it.  My winning percentages would need to be very high — on an annual basis to make money using a 1:1 or even inverse risk to reward.  But I am human and I make mistakes and sometimes the market simply doesn’t go my way.  I allocate for this by using a risk to reward in my favor.  For example, the British Pound trade resulted in a risk to reward of 1 : 7.75.  That translates into this — “I have to lose 7.75 trades to knock out my profits.”  Yet, the first question I am often asked is, “What is your winning percentage?”.

Here is the issue with that question:

  1. I developed the indicators.  For me to give out my winning percentage would be misleading.  I know my indicators and their power better than anyone.  So why would a trader think they can match or beat my percentage?
  2. I understand risk to reward and it is one of the first things I teach new traders.  Why?  Because most traders do not understand it, do not use it, and cannot calculate what their current risk to reward ratio is.  But then they wonder why they are consistently losing money.  Yet, if they have it wrong, they WILL LOSE money.
  3. I trade with higher timeframes.  The higher timeframes dictate where price will go.  Since price moves within the constraints of support and resistance, I know that I have an advantage because I read the volume at these key areas and set a risk to reward that favors me being profitable.

My system is designed for traders that can achieve a winning percentage of 50% or greater, who can follow rules, and read volume at these key areas.

When I came into trading, there were no numbers in a report.  Instead, I spent hours analyzing these numbers.  Risk to reward — which numbers work to make me successful?  How much could I anticipate the market to move on any given day?  How much could I anticipate the market to move during a particular hour?  How do the market reports, on average, affect the market?  I answered my questions because my success as a trader depended on it.  It was just reading material — it was specific, concrete information that I could design my trading plan on.

My Market Volatility Report is on my desktop because I use it everyday for trading futures and forex — it is my holy grail for knowing how the markets move.  Then I just simply follow the support and resistance with volume and price analysis to lead the way into a trade.