AI Skill Report Card
Analyzing Trading Scenarios
Trading Scenario Analysis
Quick Start15 / 15
Given: EURUSD at 1.0875, US NFP +180k vs 150k expected, EUR CPI 2.1% vs 2.3% prior
Analysis: USD strength on jobs beat, EUR weakness on inflation drop
Setup: Short EURUSD, target 1.0820, stop 1.0910
Risk/Reward: 35 pips risk, 55 pips reward (1:1.57)
Recommendation▾
Add a simple decision tree or framework for quickly determining trade bias when fundamental and technical signals conflict
Workflow13 / 15
Scenario Analysis Steps:
Progress:
- Identify the currency pair and current price level
- List all economic data points and expectations vs actual
- Assess fundamental bias (which currency is stronger)
- Check technical levels (support, resistance, trends)
- Calculate risk/reward ratio for proposed trade
- Set entry trigger, target, and stop loss levels
Data Impact Hierarchy:
- Central bank rate decisions (+/- 100-200 pips)
- Employment data like NFP (+/- 50-100 pips)
- Inflation data CPI/PCE (+/- 30-80 pips)
- GDP releases (+/- 20-60 pips)
- PMI/sentiment data (+/- 10-30 pips)
Recommendation▾
Include common risk/reward ratios benchmarks (e.g., minimum 1:1.5 for day trades, 1:2 for swing trades) in the workflow section
Examples18 / 20
Example 1: Input: "GBPUSD at 1.2650. BoE holds rates at 5.25% (expected hike to 5.5%). UK retail sales -0.3% vs +0.2% expected. USD DXY at daily resistance." Output:
Fundamental Analysis:
- GBP: Dovish surprise (no hike) + weak retail = bearish
- USD: At resistance suggests potential weakness
- Net bias: Slightly GBP bearish
Technical Setup:
- GBPUSD: 1.2650 near daily support at 1.2640
- Break below targets 1.2600 (next support)
- Resistance at 1.2680-1.2700
Trade Recommendation:
- Wait for break below 1.2640 support
- Short target: 1.2600 (50 pips)
- Stop loss: 1.2690 (40 pips from entry)
- Risk/Reward: 1:1.25
Example 2: Input: "USDJPY at 148.50. US CPI 3.7% vs 3.9% expected. Japan PPI +2.8% vs +3.1% prior. 10yr yield spreads widening for USD." Output:
Fundamental Analysis:
- USD: Lower inflation = less Fed hawkishness = mild bearish
- JPY: Lower PPI = deflationary pressure = bearish
- Yield spreads: Favor USD = bullish USD
- Net bias: USD bullish (yield effect dominates)
Technical Setup:
- USDJPY: 148.50 in middle range (148.00-149.00)
- Next resistance: 149.20 (monthly high)
- Support: 147.80 (daily low)
Trade Recommendation:
- Buy on dip to 148.00 support
- Target: 149.20 (120 pips)
- Stop: 147.70 (30 pips below support)
- Risk/Reward: 1:4.0 (excellent)
Recommendation▾
Provide a quick reference table of typical pip movements for major news events to speed up impact assessment
Best Practices
Data Release Impact Assessment:
- Deviation >0.2% from forecast = significant
- Use Economic Calendar consensus vs actual comparison
- Consider previous month revisions alongside current data
- Weight more recent data higher than older releases
Technical Confluence Requirements:
- Minimum 2 technical factors (trend, support/resistance, patterns)
- Daily timeframe for direction, H4 for entry timing
- Always identify nearest major support/resistance levels
- Use round numbers (00, 50) as psychological levels
Position Sizing Formula:
Risk Amount = Account Size × Risk% (max 2%)
Position Size = Risk Amount ÷ Stop Loss Distance
Example: $10,000 × 2% = $200 risk ÷ 40 pips = 0.5 lot
Common Pitfalls
Data Analysis Errors:
- Focusing only on headline number, ignoring forecast deviation
- Not considering data revisions from previous month
- Mixing timeframes (daily bias with scalping entries)
- Ignoring correlated markets (bond yields, commodities)
Technical Setup Mistakes:
- Trading against strong daily trend on minor pullbacks
- Entering exactly at support/resistance without confirmation
- Setting stops too tight relative to pair's average daily range
- Ignoring upcoming high-impact events within trade timeframe
Risk Management Failures:
- Risking more than 2% account equity per trade
- Moving stops against you after entry
- Not having predefined profit targets
- Adding to losing positions without clear reversal signals