So Switzerland did something interesting (part 2)

Continuing from the last post (for those interested in Forex)...I am going to present a method that can be utilized even by novice traders to gain profits.

'Scalping' is a method that describes Forex trades that are very quick. Usually a trader is in and out of the market in minutes, rather than days or weeks. The trader is looking to take small profits regularly, rather than long term trades to take advantage of an uptrend or downtrend.

As previously discussed, the Swiss Bank's Vice Chairman (Jean-Pierre Danthine) has said the 1.20 EUR:CHF floor would be maintained with the 'utmost determination'.

So if the lowest the exchange rate will be (whilst the floor is maintained) is 1.20 - how can traders make money from this?

Simple - When the market drops near to 1.20, this is a signal to go long. As the price is not going to go down further, the only way the price can go is up. Although the gains are small, some money is better than no money!

This is a graph showing the EUR:CHF 1.20 floor

EUR:CHF from 15/05/2012 to 19/09/2012

If you were able to set your stop loss (red) a bit below this 1.20 floor to protect yourself, and your take profit around 1.2012 (yellow). Shorting the market close to 1.20 would have generated small but quite regular profits. This is ideal for the novice trader who is looking to build up their account.

Recently the EUR:CHF has weakened to its lowest levels in over eight months. If it was to return to its lower levels, this situation would once again give the opportunity for scalping (as long as the Swiss Bank maintains its plans for the 1.20 floor). Look out for this!

Thanks for reading,

Jr

twitter.com/jr_dot