The market is tight right now as can be seen by the drastic move in the pip potential compared to previous weeks. Everything but the swissy and loonie shows sideways movement right now or trading within a range.

As mentioned in my comments last night the expectations were for a spike and then a consolidation over the next 4/5 days. That is pretty much what we got. There was an opportunity at the open to catch quick pips which I missed. I took the gbp/jpy and gbp/usd to go down, which they did at first, but I took them too late due to Sunday family stuff and got stopped out.

Some signs last night that were like canaries in a mine:

• the weakening of the strength
• the gpy/jpy high being lower than the close
• everything going down, but the Euro going up

I like to see confirmation in the forecasts through currency relationships. The gbp/usd going down or up, and the usd/jpy doing the opposite. The euro/usd going down or up, and the usd/chf doing the opposite. Or everything strong to go down one way or the other. These are all the nuances that you will pick up on over a few weeks of using the forecasts. You would have noticed that the euro hit its mark.

We were also on a roll for the last 7 sessions. Even though I have mentioned many times to operate in a vacuum and look at the forecast with blinders on, I am not a believer in 100% accuracy. I have mentioned this in previous posts, and have advised always using stops. We are in a volatile period right now and need confirmation of direction, which the forecast will give us. So now is the time to tighten profit expectation, cash fast pips, and move on if stopped out. Lets see how the trend develops over the next few days and tighten up our profit position in trades. I like to get at least 50 pips or so, but after a week like last week, why be greedy? Take 30 pips and run.

Now speaking of stops. I use stops to prevent catastrophic events. I position them based on the forecasts and the currency pair I am trading. Many times you will kill a potentially winning trade by being stopped out, but why risk getting burned, I would rather lose a little than get wiped out.

The 4 majors would have different stop set-ups in my mind than a volatile pair like the gbp/jpy. The major pound and yen will have a wider stop than the euro, and the swissy narrower than the other 3. To trade a pair like the gbp/jpy I sometimes will go further than the forecasts call for. Sometimes as much as 200 pips. If you put a 50 pip stop on that pair you will surely get stopped out 9 times out of 10. Only trade the yen pairs with a good cash base in your account.

Everything other than the yen pairs, I am comfortable going 10 or so pips outside of the range. When in a profit position, if able to, move the stop and the take profit. If you are an absentee trader (which is fine), just take your goal.

My suggestion when learning the nuances of the forecasts is to pluck 25 to 30 pips out of a trade. Become familiar with a currency pairs movements over time. Then when a trend develops one way or the other, grab more pips and milk out winning trades.

Good Luck and thanks for all the positive e-mails.