How to trade GBP/USD (Cable): Tips & Tricks


tell us a bit about the pound to the US

dollar relationship it's called the

cable and we discussed earlier on how do

the two work okay well it's a pound

against the dollar the pound is called

the base currency and the dollar is

called the second big currency so if you

get a cut of 1.25 for example it means

that it's 1.25 of the secondary currency

to buy one unit of the base currency

okay and that's how old spot for X is in

fact quoted so in the pound against the

dollar and the Euro against the dollar

the dollar is the secondary currency but

just to make things a little more

difficult against the Swiss franc and

the Japanese yen the dollar is the base

currency so if that dollar is going up

against the Japanese yen the graphs

going up the page but the dollar is

going up against the pound the graph is

going down the page I'm at the retail

level getting that across is quite

something I've been sitting in classes

of aspiring traders that couldn't quite

get that after many many many hours as a

desperate trying to get across I gave up

so that's that's how their quotas and

it's a fairly linear business if you buy

the pound against the dollar if you buy

cable and the chart goes up the page it

means that parent the pound is increased

in value over the dollar if you have bet

that way you make some money if you've

bought the point sold the dollar and the

chart goes down the page when you've

lost some money so there's not like

options where you've got all those Greek

sellers waving at you it's a purely

linear business why is it such a popular

pair for traders because it tends to

brick and brick quite strongly as I said

earlier if the cable had hair her hair

would be red she's got a temper on her

and she can move quite strongly one way

or the other

in the morning in the London morning

it's a big big part of the daily volume

so quite easy even at the institutional

level to get sold quite easily without

any effort in the eastern session the

time against the dollar is a very very

very small part of the trading and many

people feel that when London opens that

it hasn't it got catching up to do and

that's a part of that what's called by

many people the cable morning to it okay

what factors affect the cable well at

the moment of course we've got Britta

brexit and article 50 being titles we've

rallied last week based on those deficit

reduction and construction numbers were

good but the big thing driving of course

would be interest rates and interest

rates in the u.s. probably going to go

up significantly more and significantly

quicker than interest rates here and

that's why the dollar I feel has still

got some more to go against the plan I

wouldn't be at all surprised that if it

got down to 112 to 115 before this is

all over by the way this move means the

kind waves but those people that come to

the deck today's meetings here and in

South Africa

I've been rattling on about the phone

getting down to 115 for the last 10

years because before the crack in 2007

it went up to 210 and it's not made a

perfect five wave advance and that five

we've advanced is nearly finished and by

my numbers which are really right so you

tend to the type it's going to get done

to 112 and then that'll be that low of

the pound for a very long time and this

is quite patriotic in nature but I think

that over the next few years the pound

will be the currency of choice fantastic

things grow and how does the role of

inflation affect

with Khandala how does inflation in fact

it well if inflation stocks and interest

rates start to move up to counteract

that inflation as interest rates move up

then that should in fact be good for any

currency pair so other thing that's

quite useful as purchasing power parity

which is a measure of value of the

currency pair so that I all of that

stuff I do not look at a great deal in

my own personal trading okay I tried to

find a trend and over the last few

months on the a more on the pound

against the dollar on the daily chart

the trend has been down making a series

of falling tops it's below an 89 day

moving average everything you want to

try say is there and then all I'm trying

to do it is to wait for a to rally and

sell it at a good level and that's what

I did yesterday morning I sold as a 62%

no maybe not yesterday morning but a few

days ago at 62% of the level last week

it made a perfect

Wyckoff up trust and that was a really

good trade about 25 old and that was a

300 point trade that was nice if you get

excited when you see the analysis come

into play you sometimes you say things

with it with the sound of satisfaction

or anything when my patterns kick in

yeah they're great they're great yeah

and I don't kill myself in that I traded

for for our chart on mostly yesterday on

the euro dollar there was that perfect

wake up setup on a 30-minute chart and

yesterday morning was Monday morning I

think so I didn't have any meetings on

so I had time to trade my sudden watch

that most of the day three day three

mornings a week I probably do that and I

look I think that the other thing in

terms of self-awareness that we talked

about one of the really most important

things as the timeframe starts to get

smaller knows you start to look at half

our chart

I think one of the most important things

that you can say to yourself do I feel

like doing this today because there's

some days we are just not there

something has happened and somebody's

upset you or something has happened and

you're just not there so being honest

with yourself and saying I'm just not up

to this today is a very very important

part of that self-awareness if you're a

beginner trading on currencies is the

pound and dollar a good one to start on

the potent dollar has been great over

the last month that's because it's been

energy there and it's been moving but

you will get moments where it sits and

does nothing for example in 1996 the

point against the door went across the

page I was like one of those Hospital

programs on the patient we just died it

went across the page at 1.6 for a whole

year and many many big funds who were

trend-following funds they took a hiding

because we're buying selling and buying

and selling buy and selling so I haven't

done a forex course at the retail level

for a very long time but a big big part

of my forex trading course was that what

I call the Forex strength matrix our

relative strength matrix while I look at

the major currency pairs and we'll do

our best by putting a matrix up of

working out where the energy is what's

the strongest currency what's the

weakest currency to try and find a trend

so I think that people will be

successful if they can find a strong

trend in the market at the moment

over the last little while six months

nine months of time against the dollar

has been the place to be that may not

necessarily always be the case so I

think that you need to widen your view

and look at the relationship between

let's say a pound the euro the dollar

the Japanese yen and the Swiss franc

maybe the Canadian dollar runs with oil

and maybe the Aussie dollar as well I'm

trying to find where the biggest trends

are ok and

I think that if the market is trending

strongly on the daily and you look for

an entry on the 4-hour chart then you're

going to find that you get quite lucky

at this if the market is going nowhere

and it's confused running sideways then

you've got to be much more capable to

make a buck okay so find against the

dollar has been great I think that it

still got a long way to go but that may

not necessarily be always be the case