4 traders made money from GBPUSD gap up; they entered last Friday!
GBPUSD was one of several major currency pairs that printed a forex gap between Monday morning open and closing price last Friday. Because forex gaps are big moves usually triggered by high impact news, it is usually difficult to anticipate and requires traders to speculate on the outcome of each news. Furthermore, high impact news need not appear on calendars and can come totally unexpected. Such as this.
Monday 16 Sep 2013 Headline in CNNMoney :
World markets rally after Summers withdraws
Most Asia Stock Markets rally after Larry Summers announced on Sunday that he is withdrawing from the race to be the next chairman of Federal Reserve. Singapore, Hong Kong, China, Korea and Australia stock markets gapped up an average of 0.6-1.5% while Dollar Index fell an average of 0.6%.
So it is really amazing that at least 4 persons made money from this totally unexpected move by Larry Summers.
Trade the flow with Tflow®
How did these folks trading with Tflow® do it? They did it by following the rules of Tflow®:
- Trade the flow
- Enter upon retracement
Few questions come to mind:
- Can one predict such market gaps?
- Will there be any telltale sign before the gap happens?
- What makes Tflow® special?
Smart Money leaves flow, trails in the market
- No one can make money trading gaps consistently unless he/she was already informed of the news.
- I believe there will be telltale signs provided by the market prior to the event because information flow is never 100% closed. There will be privileged persons/organisations who are able to get some first hand information before us.
My own personal belief – because of unequal news flow, a group or groups of privileged individuals or organisations have exclusive information. They use it to their advantage to make money. These actions leave trails. I call them SMART MONEY. Because Smart Money wins all the time, I look for smart money trails to join the ride.
Tflow® is a trading strategy that trades on identifying Smart Money by detecting flow, trails in the market.
Illustrating GBPUSD and how Tflow® trades in the direction of smart money
In a posting that I did on Friday 13 Sep (titled: Price actions of GBPUSD following positive data) , I was very bullish on GBPUSD.
Blog posting on 13 Sep
I was bullish because Tflow® shows that Smart Money flow was up
Because price action shows that there was a very nice up-flow flowing into GBPUSD. Most important, these up-flow (also known to us as SMART MONEY) has been flowing into GBPUSD for many weeks! Even on 13 Sep (2 days before Summers announcement), smart money was still flowing into GBPUSD causing it to break above a recent high.
GBPUSD showing smart money flowing in
Because of the flow of Smart Money at the Daily and 4 hourly timeframe, I was very bullish on GBPUSD. Price shot up too fast and thus an entry is only possible when price retraced back to 15840.
There are 2 ways to trade GBPUSD:
- On a break of key resistance
- On a retracement to key support (use to be resistance). Tflow® encourages a retracement trade.
4 traders made money trading GBPUSD with the flow before it gapped up
Price gaps up due to a key political change. Most important, we traded on the right side (the winning side) by tracking the flow of smart money. Our students benefited too.
Smart Money trail is not a new concept; walking down memory lane