The above candles are 15 minute charts (USDCHF) from April 4, 2008 at 8:30am Eastern, at the time of the release of the embargo on the non-farm payrolls for March. The first image shows three doji's in a row, the middle doji (red upward arrow) is very long-legged. This is indicative of extreme market indecision. I had decided to ""sleep-in" since here in Arizona this was 5:30 am, probably a wise decision. Forex trading is risky when it is calm, very risky at the time of a major news announcement, like the nfp today.

If you could make a great trade on this nfp, you are a real wizard. I have just seen too many of these where you get these wide swings very rapidly which usually run your stops, and you just give money away.

This is the 5 minute chart where you can see a little better what actually happened. The nfp today was really "bad" news for the dollar. A loss of 80,000 jobs and a rise in unemployment to 5.1%. The dollar drops initially, but soon rebounds and then for a few minutes settles about where it started. How many times can one find this type of "opposite to what you would expect reaction to the news?"

Another possibility could be market manipulation. It is strange to get such a long-legged doji, -right at the time of the non-farm payrolls announcement. Also, this doji was in the middle of two other smaller doji's. For approximately forty-five minutes, the price was held relatively constant during the "most major" of news announcements.

The dollar finally starts down to end slightly lower than where the initial drop reversed. This example, based on real charts from today's nfp, demonstrates how tricky it can be to try to play the nfp. Even with some advanced knowledge, it would have been difficult to have a successful trade on this news. The only play was to sell dollars with wide stops (risky) and not try to exit after the initial nfp swing.

Discussion

The above candlesticks (5 minute charts) came from the FOMC interest rate announcement on Tuesday 8/08/06. The USD/CHF shows a morning star pattern soon followed by an evening star. The GBP/USD shows just the opposite. One lesson I have had to learn the hard way is that your own interpretation of the news is not what is important ... It is what the Market thinks about the news. The initial red candle (USD/CHF) is the market's reaction to the FOMC pause on interest rate hikes. This is followed soon by a shift in market sentiment (hammer) and a reversal (green candle) as indicated by the morning star pattern. This was the market's reaction to the wording surrounding the rate hike pause (ie promise of further rate hikes soon in the fall). This sentiment, however, was not too long lasting either (spinning top) as the green candle soon reversed as indicated by the evening star. Just the opposite occured with the GBP/USD currency pair. This was a nice display of some really pretty spinning tops and a hammer.

How to Educate Your Forex Money

How to educate your forex money -ie make it "smart money" not "dumb money." Before you sign up for your first live (real) forex account, take some of that money, call it educational, and sign up for Peter Bain's course first! Then signup for a "demo" account with any non-dealing desk broker that uses metatrader and practice trading with virtual money, not real money. When you do finally signup for a live account, having done these things will give your money the best chance it has of finding its way back to you, along with someone else's money, that maybe is not as "smart" as your money!

Take a moment here and give a listen to one of Peter's am reports.