FX TRADING METHOD
markets. Yes, Forex trading is a “Tug of War” – the bears forming one group and the bulls forming the other group. As the “Tug of War” progresses a trend usually takes hold as the relative strength of one group exerts itself over the other group. Over time this trend changes directions as the relative strength of each group rises and falls. Sometimes, the trend change happens
as
a “fake and reversal” – and some of those reversals can be quite significant.
This “Tug of War” between the bears and the bulls is what a trader watches – waiting for an opportunity to join the game – preferably on the winning side. So “which side” to join – and “when” to join it – become the critical questions?
However, my method is optimized and tuned to short term trading – usually less than a day in a position – sometimes only minutes. Longer term trading involves considerations that I do not address in my short term trading method – however, my
a potential short term Forex trade is the current trend. Is the market trending up, down or simply moving sideways? Actually, I look for multiple trends; observing the trend on each of my three intra-day charts. It is not uncommon for all three trends to be in the same direction – or not. The type of trade I will watch for is determined by this assessment of the several trends. Forex markets prone
are to
This “Tug of War” between the bears and the bulls is what a trader watches, waiting for an opportunity to join the game, preferably on the winning side
There are many ways of picking the winning side and the time to join. In this article I am going to describe my particular method – which I obviously think is a good one.
method is adaptable to longer term trading if desired. Te big differences between short term trading and longer term trading are the risk versus reward considerations.
IDENTIFYING THE TREND The first thing I look for in assessing
72 FX TRADER MAGAZINE October - December 2013
follow trends tenaciously – until they finally reverse – and the faster charts always indicate a reversal first. The three intra- charts typically I use for Forex trading
are
configured as follows:
1. P r i m a r y
intra-day trading chart of a few thousand ticks per bar – usually about 12 to 18 bars per day.
2. Secondary intra-day of 1/10th the ticks per bar of the primary intra-day chart.
3. Fa st int r a - d ay cha rt of
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