Due to recent market volatility, currency trading is experiencing a popularity boom; Rob Colville shares his most recent trade examples.

Fast, furious, volatile conditions have recently created abundant opportunity in the world’s currency markets. This is particularly true for the thin band of armchair traders such as me, who have been reaping rewards from low-frequency trading.

For end-of-day traders, daily low-frequency trading yields the best financial return for time spent glued to the screen. It is amazing how so many rookies simply take the high-frequency option, which ensures they are chained to the desk for hours on end, often with no money back.

As you will see from my recent trade examples, volatile conditions have helped me to capitalise on untamed price swings. Market conditions have enabled my trades to attain a 5:1 reward-risk ratio in days, rather than weeks. In this way I have been able to achieve my objective of making money work hard for me.

Trade example 1: AUD/USD
The Aussie dollar was one of the more recent homeruns. The action started on 4 October. I traded the low-test bar off a level previously respected as resistance. As with all high- and low-test bars I trade, the order (long) was placed halfway down the bar instead of above the high of the day, to capitalise on potential retracement the next day and essentially double the reward-to-risk ratio. The volatility that followed enabled me to hit my target at 10176 in six days, netting a 6.3 per cent gain (figure 1)...

Excerpted from an article originally published in the Jan/Feb 2012 issue of YourTradingEdge magazine. All rights reserved. © Copyright 2012, Your Media Edge Pty Ltd.
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