Trader and author Raghee Horner of Interbank FX talks about proximity in forex trading.
It's not something you'll hear many traders talk about, but Raghee does emphasise it quite a bit. Since she has literally decades worth of experience in the financial markets, it might be a good idea to listen to what she's saying:
"One issue with entries and economic releases is something I call “PROXIMITY”. In other words, how close or how far is a trade from triggering? For example, the GBP/USD swing entry on the 15-minute chart is right on top of the entry trigger. In my opinion, for momentum trades this is a better scenario-- but often for swings this is far less desirable because of the volatility. I would rather have swing entries with a little further to go before the exhaustion if economic releases are close by."
This is a very good point, but often overlooked. You want to be extremely careful, especially when dealing with news trading. Another problem is that spreads can increase to a silly level, volatility increases, and if you have a pending order, this can be a cause for concern.
Hence, Raghee continues: "This kind of analysis takes very little time as long as you know the pair and the time frame you are setting up..."
Trader and author Raghee Horner of Interbank FX talks about proximity in Forex trading. It's not something you'll hear many traders talk about, but Raghee does emphasise it quite a bit. Since she has literally devades worth of experience in the forex market, it might be a good idea to listen to what she's saying: "One issue with entries and economic releases is something I call “PROXIMITY”. In other words, how close or how far is a trade from triggering? For example, the GBP/USD swing entry on the 15-minute chart is right on top of the entry trigger. In my opinion, for momentum trades this is a better scenario-- but often for swings this is far less desirable because of the volatility. I would rather have swing entries with a little further to go before the exhaustion if economic releases are close by." This is a very good point, but often overlooked. You want to be extremely careful, especially when dealing with news trading. Another problem is that spreads can increase to a silly level, volatility increases, and if you have a pending order, this can be a cause for concern. But Raghee continues: "This kind of analysis takes very little time as long as you know the pair and the time frame you are setting up..."
