Will I continue trading through Brexit?
The way Brexit has gone will likely continue to impact the Forex market for months. From what David Cameron has said, he has no intention of triggering article 50, and he has passed the burden on to the next prime minister. This means we are unlikely to see a resolution to Brexit for another 3-6 months.
So what should I do? Give up trading for the rest of this year? Nah…
… I will continue to trade while exercising great caution. I will make sure my risk remains low, and I will play it safe.
One of my biggest strengths as a trader is that I can sit on my hands when it is needed. If I feel that not trading is essential for the survival of my account, I will stop trading for a few days and reassess. However, right now, I feel that I can start trading again if I play it smart.
What pairs will I avoid, and how long will I avoid them?
As of right now, I do not see any situation in which I would enter a reversal trade on GBP in the next four weeks. For me, GBP is completely off the table. My thoughts on the EUR are similar, but I will revisit EUR trading in two weeks. This does not mean I will start trading the EUR again in two weeks, it means I will reassess my position .
I might also avoid trading CHF pairs this week, as CHF is closely tied to the European economy. I will revisit this decision next week.
What precautions will I take?
I will be reducing my risk by 25%-50%, for example, if I trade with 1% risk normally, my risk will be 0.75%-0.5% this week. While I will consider reducing risk by only 25% in certain situations, it is unlikely to happen. Most of my trades this week and in coming weeks will have risk reduced by a full 50%.
The only even that would prompt me to reduce risk by only 25%, is a perfect trade setup on a pair not closely tied to Brexit, AUD/NZD would be a good example. This is unlikely to happen though, I am simply putting this rule in place in case it does.
Price Action analysis for 2016-06-28
We have a potential short forming on the USD/CHF daily chart. I will monitor this setup closely in case it triggers.
When I shot this analysis we had a potential USD/CAD trade forming. Unfortunately it has already triggered in the 3hr chart, so the analysis I did for that setup is no longer valid. Although, it does look like the trade will be profitable on the 3hr.
For detailed info on these setups and yesterday trade, watch the video below.
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