A nasty head fake in the euro/dollar

Head fakes are one of the trickiest features of tramline trading, says John C Burford. Here's how to handle them.

Many traders ask me what my top markets to trade are. That's easy to answer. They are the Dow, EUR/USD and gold.

Gold is the slightly odd one out, because it is often treacherous and spiky. The Dow and the euro, on the other hand, trade with very few of these qualities. But the potential rewards in gold trading make it worthwhile - as long as risk is under control.

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(Contracts of EUR 125,000)Row 0 - Cell 1 Row 0 - Cell 2 Row 0 - Cell 3 Open interest: 260,799
Commitments
86,96372,6166,663126,816118,340220,442197,61940,35763,180
Changes from 01/21/14 (Change in open interest: 5,499)
7,642-10,477498-4,25722,3283,88312,3491,616-6,850
Percent of open in terest for each category of traders
33.327.82.648.645.484.575.815.524.2
Number of traders in each category (Total traders: 182)
4464234649103123Row 8 - Cell 7 Row 8 - Cell 8

John is is a British-born lapsed PhD physicist, who previously worked for Nasa on the Mars exploration team. He is a former commodity trading advisor with the US Commodities Futures Trading Commission, and worked in a boutique futures house in California in the 1980s.

 

He was a partner in one of the first futures newsletter advisory services, based in Washington DC, specialising in pork bellies and currencies. John is primarily a chart-reading trader, having cut his trading teeth in the days before PCs.

 

As well as his work in the financial world, he has launched, run and sold several 'real' businesses producing 'real' products.