Down and down it goes, where it stops nobody knows.

Strange title I know, but this is about the art of “laddering orders in an attempt to peg the best price towards the bottom. You see, I don’t know where this will stop, but I want it, and that is all that matters to me. I am convinced and convicted that this yen strength is ridiculous and should not be so.  The chart you see is a daily chart and the BOJ should be stepping up to do some intervention at certain levels.  We know that there are a ton of bids stacked near the 86 mark. They want it if it gets there.  So do I.  So, what I have done is set orders to take this LONG at various prices and constantly “doubling” up down into the 85.50 mark.  That will be a SUPER wide range bar should that ever happen. And… I would be mega long there.  My expectation is that this will NOT reach that level.  At some point the selling of this pair will cease and I will be long whatever amount… I do not know the extent yet. But I will have come very close to pegging the bottom. Then I only have to wait till it oscillates back to yen weakness ( market always does this by the way) and I can exit my longs on some renewed bout of euphoria.  The way to do this is take a small initial position, realizing that this may be all you ever get. lets say like $5,000 worth, (I am picking something small).  Then you are willing to get another $5,000 worth if it pulls back into the 86.50, but if it drops to 86.35… well then I want to have a full quarter lot ($25,000) on it. but, should it work down into the 86 area? Well by that time I would have a full lot of 100K and should it get into the 85.50’s ??? We might consider being in lets say 3 to 5 full sized lots.  It is simply stacking orders all the way down until ones maximum position size is reached.  This can be done if you really want something. But just don’t want to stay awake all night to get it. Try some examples out on paper and see what you come up with.  I do this often.  Sometimes I wake to just 10 or 20 pips of profit and have to re assess the situation.  Sometimes I awake to a hundred pips.  And of course there are all points in between. Sometimes I awake to a real problem and have to work it all day long to get back to normal, but thankfully this is very very rare.  Only do this with things you are VERY confident in and never go beyond what you are comfortable with.  Look at key areas on the charts that your wanting your position and set your orders. Traders place bids and offers all the time. This is a good way to get in while not around to do so.  Thanks for reading and happy trading.  Michael Storm aka robinhood.

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  • Robinhood777

    Thanks for your comments guys. As it turns out only 3 of my orders were ever hit, and unfortunately I had a paltry size long. Not only that I dumped it all way too soon. For +10, +25, +38 and then watched it race higher by about 45 more pips north, and I had nothing left. So, this happens too. I notice a lot of traders (twitter) that take just ONE short or long and place just ONE more but at some BIG distance away… I am just circumventing that in a manner that will end me up at a good average price, very close to whatever the bottom ends up being, which we never really know.

  • Patrick

    This is a very dangerous way to trade, especially for the weak at heart. You are anticipating that the price is going to reverse at some point, as you said, you don't know. So, if for any reason the price plunges to 79, then I think you will start to sweat bullets. Do not bet against the trend. I see this over and over by novice traders. Yes, in a lot of cases the price does come back, but can your account wait out the market? I like to ride the trend up or down and hop off when it moves against me. If the trend is down, then what's the logic betting against it?

  • Peterneedham

    Michael, I have traded your technique successfully in the past, and have also taken unnecessary draw-downs with this method trying to catch a falling knife – so be careful!!
    The logical areas below are 86.27 and then 85.87
    Remember – 'the market can stay irrational longer than you can stay solvent'
    Other approaches to consider:
    A) trail a buy stop above the market – presumably you only want this because you think it will go up dramatically; if it does, the trailing buy stop method will catch it.
    B) wait for ending downside action, then a reaction higher, then buy the replacement AFTER the reaction higher from finding the “bottom” (assuming it is a “bottom” :). Unless there is a V-bottom without a retest/replacement, (B) is the best method and safest method IMHO.
    All the best, and good luck with whichever method you take.
    Peter