How to Create Buy/Sell Plans Learned from a Currency Exchange Broker | Part 27: Incorporating the Third Wave Concept into USD/JPY Market Analysis (20) [Toru Asano]
This企画 features a book-style guide where Toshirou Asano shares his sales and buying methods and know-how for building market views, backed by his own experience and knowledge. As in the previous installment, he will continue to interpret the recent and future USD/JPY market conditions and present an optimal trading plan accordingly.
※This article is a reprint and rewrite of FX Strategy.com July 2019 issue. Please note that the market information written in the text differs from the current market.
Toshirou Asano Profile
Asano Toshirou. He has worked at Tokyo Forex Corporation, a foreign exchange trading intermediary within the Tobu Shoten group, and at EBS (now ICAP), which boasted over 80% of the global market share in currency trading. He experienced historical markets firsthand, including the 1985 Plaza Accord, the era of extreme yen strength, the bubble burst, and the euro consolidation in 2000, developing his market sense. He later founded two FX trading companies and also worked as a dealer for a private FX fund. Currently, he writes for the daily blog of the Investment School Group. He is also a sought-after creator of clear video works, leveraging his specialty in video editing.
Are you prepared for price-based expectations before trading?
Now, this is the first article of the Reiwa era after the Heisei era, and at this perfectly timed moment before the first-ever 10-day long holiday, I would like to summarize some fundamental approaches to “how to create a trading plan.”
What I focus on is the only thing: before you start trading, you should be able to anticipate everything in terms of price. After all, humans tend to act poorly without assumptions, and it becomes difficult to verify outcomes. For example, the rationale for buying at a moving average golden cross (GC) is based on the assumption that an uptrend has been confirmed. However, many indicators are post hoc; an up move causes a GC, not the other way around, and it’s hard to call that a genuine assumption.
Moreover, many of these technical indicators struggle to indicate signals in advance with price, making it difficult to set up pre-trade orders. Consequently, in many cases you must employ a different method for stop-loss orders after entering, which makes the overall approach more complex.
Of course, in situations where new highs or lows continue to be set, there are times when “leave it to the market” is inevitable. But there are numerous checkpoints before that point, and I aim for most readers to be riding that wave at that time.
