The OmiCronFX “Mandelbrot”
algorithmic routine is designed to limit losses on those occasions when the
Forex exchange rate behaves in a contrary manner, and to maximise the profit
when it goes in the right direction for that particular trade.
The Non-Farm Payrolls report release
is one of the most notorious for the level of short-term volatility that
follows it, which can cause extreme damage to trading accounts, if not handled
properly. Many traders simply stay out of the market on that day, and for them
it is a wise choice.
Last Friday was NFP day. Mandelbrot
was configured to deal with it and it did so in the manner shown in the
attached chart (EURUSD, 10 minutes), and as explained below:
The timing functionality in
Mandelbrot was set so the trades would not start until short-term volatility
had died down after the NFP release.
Initial reaction to the release was,
as usual, followed by extreme short-term volatility, but the bias was
determinately to the downside. Mandelbrot entered a trade accordingly, in
proper time.
Chicago
futures traders show their power
At 15:00 GMT, which corresponds to
Central Time Zone opening time of the Chicago Futures trading day, price
reversed. Chicago sometimes has this effect, but it can also reinforce an
existing trend in the same direction, so a reversal is not a given.
The trade was stopped out by the
Mandelbrot trailing price-based stop, for a very small loss.
A new long trade was entered shortly
afterwards.
This trade went enough into profit
for half the position to be taken off at 1% equity growth, and half of the
remainder at the 2% level.
The trade was finally stopped out by
the time and price based stop loss mechanism when the exchange rate had
levelled out.
The eventual behaviour of the pair
was given as a possibility in the OmiCronFX commentary on Friday morning (Non-farm
Payrolls today better be good), when it was stated that the US
dollar was overbought, and ripe for a correction.
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