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We just had a quick question from Sam, asking us what the processes that we follow to get to the trade idea for the day? So what is the best process – how to find daily trades with highest probability?
We’ve created a Daily Analysis Checklist. You can click to go straight to it below.
Another great resource that you can find helpful afterwards is: How To Trade Sentiment With High Probability (opens in a new tab)
Finding Daily Trades As A Process
Normally when I get to the screen, the opening news, if the European one, isn’t loaded yet so I normally start with the Daily ASIA-PAC opening news. Once the European one is in the terminal I’ll read through that, basically going through all of the major events that is moving the various asset classes across the board, especially the events that might have taken place while I was away from the screens. After that I normally move on to additional news, additional research, analysis etc.
The one that I normally start with on Zenith, if you have access to that, is reading the FX news articles, as well as the global market news, and the commodity news across the boards, seeing if there’s anything that’ll be important for the trading day ahead. If you don’t have access to Zenith, some of the other sources that you can use for that is places like Bloomberg, REUTERS, as well as forexlive. Then after that I normally start with the Intermarket Analysis, now what I’ll normally do there is I’ll start with equities across the board, looking at equity futures as well as looking at the indices from my Zenith platform.
After that I’ll also have a look at other asset classes, like commodities, having a look at volatility, bond yield, spreads and then of course the currencies to see exactly what type of movement we’ve been seeing in the currency space.
Now after that I normally do turn to the calendar as well, having a look at the upcoming events that I have scheduled for the rest of the session. If there’s any major events that I need to be preparing for.
Then after all of that, that should normally give me all of the information that I need to know exactly what the dominant currency drivers are for any particular currency session, or any particular trading session. That’ll give me a sense of the dominant theme for that particular day.
Daily Analysis Checklist
Now what that analysis checklist will help you do is basically taking you through all of the stages that we would recommend you guys go through.
1. Daily Opening News, making sure you know exactly what’s moving the markets. Doing your Intermarket Analysis, making sure you know what’s happening in equities, commodities, currencies, bonds etc.
2. Daily Risk Event Outlook Report. There you’ll find the upcoming events as well as the expectations, you’ll also see upcoming political events as well as Central Bank events.
3. Dominant Currency Sentiment Report. If you open up the market insights tab you’ll see that we’ve basically all the information that we go through on a daily basis, all the investment bank analysis, all the opening news, all the articles, all the additional research. We provide you with the strongest and weakest currency to make the base pairings for the session ahead.
4. Financial Source Video Commentary Videos. Apart from the opening videos that we do every day, we do post video updates throughout the day, making sure that you guys stay on top of any shifts that we see.
5. Sentiment Drivers Report. Now the best thing that you can do for that is go to the market insights tab, and then you basically just have a look at the prior days Current Sentiment Drivers report, so you’re looking at the future sentiment shifts that we think can move this currency going forward.
6. Your own additional news analysis and research. Like we’ve shown you in some of those other sources. And then after all of that you can do your chart analysis.
Once you’ve established that, then you can go to the chart with any type of technical strategy that you want to really find those highest probability entries and exit levels.
We use things like support and resistance, psychological price levels, sometimes we’ll use Fibonacci as well, we use the ADR to show us the highest probability volatility range for a particular currency pair.
You can also use things like pivot points, you can use things like moving averages, any real technical strategy that you feel comfortable with, you can use after you’ve basically decided what currency should be the strongest and weakest one in a session.