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TRADING METHODS FX


it is replaced by a more successful one.


1. Range-bound trading


Part of the larger family of trend- following trading strategies, r a n g e -b ou n d trading consists of following the


moving


average angle of


currency.


Following the rise and drop in angle, we can establish if a trend is getting stronger


or


weaker. If the moving average shows


great


variation, with sharp rises or drops in a short period of time, it means that the trend is f latlining – it doesn’t show a clear tendency.


2. Support & Resistance Trading


In the Forex market, prices revolve around support and resistance points. These terms represent the tendency of prices to bounce back from previous highs and lows.


subsequent prices against recent highs and lows. Historically, central banks, the largest financial players on the Forex market, have intervened in order to prevent the price going under or over certain levels. This has created a ps ycholo g i c a l effect on the rest of the traders, c ond i t i o n i n g them to expect this i nt e r v e nt i o n and


act accordingly.


Op e r a t i ng around the highs and lows of a currency firstly requires


their


Your strategy is shaped by your personality and your understanding of the market


By reading the signs, you can easily build a histogram of the trend. Next, the right course of action is hard to miss. Buy early on in the trend, sell when it is still rising, get out when it is f lat and wholly avoid the dropping point. This is one of the simplest trading strategies as it requires you to follow only the price.


Simply put, once a price reaches its low point, it gathers support in order to rise. At its high (or resistance) point, it bounces back to dropping.


The market supports rises but resists their passing of a certain point. This occurs because market participants tend to judge


ident i f ication. Secondly, you need to take into account the behavior of other traders. In the support camp,


some hold onto their


position only as long as it takes for the price to reach the high point. Others push for a full breakout, meaning going over the resistance point.


In the resistance camp, timing is everything. You need to recognize the trend early on and amass the currency in order to dump it at its


FX TRADER MAGAZINE July - September 2017 57


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