Tuesday, April 7, 2009

Riding the AUDJPY Sideways

So, it looks like we've had several days of sideways motion on the charts. I don't mind at all.

As long as you buy on the low end and sell on the high end these are good times to play in the market too.

For periods of non-trending action I like to watch the stochastic and RSI indicators. The stochastic are reasonable but they do give a ton of false signals. The RSI can help corroborate their action a little bit.

Something I like to do, especially because I continue to expect a long term upward trend, is buy a long position and see what happens. If the movement is what I like to call rational, I'm willing to buy another below it. When the higher of the two long positions is profitable, I'll sell it.

This effectively replaces my higher position and makes it harder for the market to dislodge me with a downward spike. Then, because I do expect the market to go up over the long term, if it does, I can potentially have multiple well placed positions just waiting to reap in the gains.

However, as with anything, it's harder than it sounds and you'll want to use small position sizes.

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