How to trade USDRUB – The US Dollar against the Russian Ruble (USDRUB) may not exactly be a well-known currency pair or even an obvious choice for many financial currency traders’ watch lists. However, when you cast such labels aside and interpret the story that the naked price action gave us on the chart in back January, you may wish to think again and include this unloved currency pair to your watch list!
We identified a forex reversal on the weekly timeframe with such good profit potential and so many clues underpinning a medium-term buy, it would be churlish to simply ignore it!
In this article: “How to Trade USDRUB”, we will reveal the exact steps we took to analyse this currency pair in order to identify a market reversal with positive reward to risk, trade the set-up and manage the trade. These are the winning components of any successful forex strategy; timing, selection and management.
Read on as we have it all covered as part of our commitment to helping you become a successful trader.
As you will discover from following us and engaging in the art of Lazy Trading we trade all asset classes – in exactly the same manner and this depends largely on according to what the chart tells us. Suffice to say, we trade what we see, not what we think. The USDRUB is no exception to this and, as you will discover, we traded this forex set-up according to the rules of our trading plan.
On the weekly timeframe (22nd January), we saw the close of a bullish pin bar reversal which gave us our signal to buy the US Dollar against the Russian Ruble (USDRUB). This was the final trade confirmation we needed in order to qualify a buy. But this was not any random or ordinary pin-bar reversal. The context of the market in relation to the price action on the weekly chart gave us multiple reasons to buy. Why? Well, price had come to a very important “buy zone”. Buy zones, in case you were wondering, are exactly what they say on the tin; areas where there are an overlap of technical levels and confluences which favour our buy direction. If, as and when price reaches the buy zone or “trap,” we look out for a buy signal or confirmation.
In the case of this set-up and how to trade USDRUB, not only was this a weekly bullish pin bar reversal rejecting a technical horizontal level at 55.85, which has not been below since 2015, this also coincided as a 50% Fibonacci retracement (taken from the US Dollar low of 2011 to the high last seen in 2016). What is more, we have bullish reversal divergence on the RSI (6) which gave us a clue that the seller momentum was declining and price was taking longer to fall. The icing on the cake of what we consider to be a good forex set-up was the fact that we had the completion of a harmonic ABCD pattern into this buy zone or “trap”. As we had a whopping four reasons in favour of trading this set and forget trade set-up, we placed our buy orders above the high of the bullish pin bar buy set-up, with our protective stop loss below its low. The confluence of reasons allowed us to play the odds in trading…to our advantage! We then sat back and let the market do the rest!
As the first week after placing our orders week closed as a bullish inside bar but without triggering us into the trade, we left our orders for another week.
After all, reversals tend to take longer to come to fruition compared to trend-based set-ups. Our buy orders were then triggered by the market in the second week. Patience is a virtue! The US Dollar then rallied against the beleaguered Ruble, going up to test the 50 exponential moving average (ema). As the 50ema had already acted as dynamic moving average resistance on two previous occasions, its third test in this instance was a warning sign that price failed to close above. Could this be a turning point?
At this point, who knows. But as price immediately fell having reached the 50ema twice before, it seemed likely. Time to refer to our trading battle plan! As we were already enjoying a rolling profit of 1:1, it made sense to scale out of the position and move our protective stop loss to breakeven. Our stop loss was now at a point where if the market did come back to touch it, the set-up would be invalid. Through this risk management strategy, we were able to simultaneously book a profit of 1% leave the trade to continue its profitable trajectory and militate against downside risk. A triple-win in its own right!
The next week (starting 12th February, the US Dollar declined sharply against the Ruble and all the gains made the previous week had been given back. Or had they? We were able to keep our profits (or at least, half of them!) thanks to our scaling out trade management strategy, which banked us half the profits the previous week while reducing the risk by half. As we has previously moved our stop loss to “breakeven” it meant that we exited the trade at no loss.
Ultimately, we exited the position for a 1% gain (risking 2%). Put into perspective, this was an exceptionally good outcome. After all, forex reversals are high risk trade set-ups with a high failure rate and this trade set-up was no exception. Even still, we were able to obtain a profitable outcome though employing diligent money management techniques. Don’t forget too, that this bullish reversal made us a 1% return on our capital and only took us Lazy Traders about 5 minutes to spot and trade, 2 minutes to manage. Most of the work was spent waiting… and fret not, we know how to keep ourselves amused while we are waiting for Mr Market to do its thing!
So, now you know how to trade USDRUB. As you follow us, it will not take you long to discover that we would trade a set-up on USDRUB no differently than if we saw the equivalent trade opportunity on GBPUSD, AUDUSD, Gold or any equity! Yes, our universal trading strategies can be applied to all asset classes!
That’s Lifestyle Trading with The Lazy Trader! We like keep our trading as easy and as simple and straightforward as possible to reap maximum rewards from spending as little time spent glued to the charts. There are many more fun things to do in life, right?