Forex Trading Pips Live Update, Wednesday 15th August

by Joe Oliver, Forex Trading-Pips

Knowing when Not to Trade: the Key to Superior Risk Adjusted Trading Performance

The British pound continued to consolidate against the US dollar in quiet European trading Wednesday following minutes from the last Bank of England policy meeting which showed the decision to keep interest rates and asset purchases on hold was unanimous.

GBP.USD has traded in a narrow range over the past 3 sessions, consolidating between 1.5657 – 1.5728 and currently trading in a squeeze on the daily time frame. Squeeze consolidations typically precede breakout moves in the Forex markets and are indicated on the chart of GBP.USD below by red dots inside the squeeze momentum oscillator.

GBP daily bars

GBP daily bars

The narrow range low volatility condition in GBP is apparent in our Intraday Intermarket Forex Signals Component which has an average holding period of 1.5 days, and which has not initiated a new position for the past five days.

Reducing trading activity during range bound markets is key for capital preservation ahead of the next shift in momentum. Superior trading performance is often determined as much by knowing ‘when not to trade’ as when to initiate new positions.