Last week the Japanese yen moved from a high of 121.480 to a low of 116.277. That is a whopping 5203 pips of movement for one week.

Now let’s look at that in dollars. An average contract for USDJPY is about 100,000. The margin for that contract would probably be something like $3,000.00.

Let’s say that you were to get a trade on this drop in the USDJPY that  captured 80% of last week’s move. Here is what the math would look like:

5203 pips X 80% = 4162 pips of profit.

Each pip is worth about $0.93.

The move last week was worth about $4,840.00.

80% of that is $3872.00.

$3872.00 profit on a $3,000.00 investment is almost 130% profit – in one week!

So it is easy to see why traders love volatility.

Do I make such trades?

No – in order to make such a trade, you would have to be in the market twenty four hours for the entire week. I prefer to trade for a few hours each day and make multiple trades

Let’s look at what might have been possible with my approach to trading.

The chart below shows the week in bars of 7500 ticks per bar – the vertical white lines divide the days of the week.


The green dots indicate a trade entry. The arrows within the dots indicate the trade direction. The yellow dots indicate the trade exit. There are eight trades listed.

Trade   Pips/Trade    80%     $/Profit/Trade

Short    628               502        468.00

Long     304               243       267.00

Short    836               669        624.00

Short   2572             2058      1918.00

Long     932               746        695.00

Short   1176            1106       1031.00

Long     796              637         593.00

Short     570             456          425.00

Totals   7814           6251       5826.00

This is theoretical trading. But the numbers speak for themselves.

My method has more potential profit and I am in the for a great deal les time. I sleep well at night.

If you are interested my method is fully explained in my E-Book, See the Music of the Market.


2 Responses to Profit/Loss and Volatility in FOREX

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The unique trading method that is Trading Between the Lines