The (Foreign Exchange) Forex Trading Market Explained.

Five No Nonsense Strategies in Forex Trading

When considering forex trading as a profit making venture, it is important to work out winning strategies beforehand if at all possible.   Making decisions regarding your forex trading and developing a strategy can be seen as your foundation.  With your strategy you will optimize your risk with respect to the expected reward, or put the odds in your favor.  Trading strategies should be disciplined and limit risk, while placing you at the most favorable advantage in the market.  One strategy is the simple moving away average, which is based on a technical study over twelve periods, with each period fifteen minutes in length.  This is a good example of a trading decision that is arrived at through strategy.

A simple algorithm is used in this strategy.  When currency price crosses above the twelfth period, simply move away it is a signal to stop and reverse.  In this way a long position will be liquidated and a short position will be established, both using market orders.  This system will keep trades always in the market, with either a short position or a long position after the first signal. 

Another strategy is of support and resistance levels.  This is another technical analysis strategy and derives support and resistance.  The idea is that the market tends to trade above support levels and trade below resistance levels.  If either a support or a resistance level is broken, then the market will follow through is the direction given.  These levels can be determined by analysis of the chart and assessment of where the chart has encountered unbroken support or resistance in times past. 

Anther strategy that many see as exotic is called the balloon strategy.  A balloon option is an option that balloons, or increases in size when triggers are reached.  For example, if an investor believes that the dollar will gain strength against the Euro in the near future and is currently trading at 100, the investor will see 110 as being strong resistance, but the investor also believes it will be broken.  So, rather than buying straight dollars at 100 for the next six months the investor will purchase at “at the money” balloon call with a 110 trigger and multiple of two.  The investor will then own a 100 call in USD110mm.  But if the dollar and Euro ever trade at or above 110, the 110 call will double to USD 20mm.

The double bottom is another strategy worth looking at.  The double bottom is significant to the short term trader as double bottoms indicate a possible major change in sentiment and trend.  The pattern is used on all times frames, and many powerful intraday and long term bull markets are conceived from this setup.  Double bottoms reflect strong support levels.  When prices fail to break support in the down trending markets on more than one occasion we see powerful changes of trend.  These reversal signals are meaningful.  The most common entry point where a trader will open on a double bottom trade is on a move through the high of the two troughs.  This high will represent secondary resistance, and when penetrated confirms a price reversal.  The stops are placed around the lows of he patters because a move below lows negates the pattern premise. 

Another good potential strategy is the ichimoku chart.  These charts are following indicators, which identify support and resistance levels and create trading signals in a way that is similar to moving averages.  A big difference however between the two is that the Ichimoku chart lines shift forward in time, creating wider support and resistance zones and decreasing the risk of trading false breakouts.  They are calculated using information on trend existence, direction, support and resistance.

The four main lines are:

Turning Line = (Highest High + Lowest Low) / 2, for the past nine days

Standard Line = (Highest High + Lowest Low) / 2, for the past twenty-six days

Leading Span 1 = (Standard Line + Turning Line) / 2, plotted twenty-six days ahead of today

Leading Span 2 = (Highest High + Lowest Low) / 2, for the past fifty days, plotted twenty-six days ahead of today’s date.

Whichever strategy you choose to use, devote as much study as possible to increase your chances of gain and profit.



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Introduction to Online Forex Trading
Current Forex Currency Rates
Forex Trading
How to Get Started In FOREX Trading
FOREX versus Futures Market
FOREX versus Stocks
FOREX Trading Philosophy
Fundamental Analysis In Forex Trading
Forex Technical Analysis - Part 1
Forex Technical Analysis - Part 2
FOREX Trading Strategies
Trading Currencies on Margin
Currency Option Marketplace
FOREX Signals
How to Read FOREX Quotes
Calculating FOREX Profits and Losses
Risks of FOREX Trading
FOREX Training
FOREX Trading Software
FOREX Brokers
FOREX Glossary
Forex Updates and Training
Crash Course in Forex Education
How to Recognize Patterns in Forex Trading Markets
Defining Exotic Currencies and Their Impact on Forex Markets
Defining Trading Trend and Ranges in Forex Trading
Mind Games – The Psychology of Forex Market Trading
Crossing Currency - What’s This Mean to Forex Traders
Money Management Basics for Forex Traders
Choosing Your Forex Broker
Expensive Beginner Forex Trader Mistakes
The Elliott Wave Theory for Forex Markets
Failsafe Facts to Guarantee Failure in Forex Trading
Five No Nonsense Strategies in Forex Trading
Global Expansion and It’s Reaches within the Forex Market
Hedging in the Forex Market
The Important Ways to Keep From Losing in the Forex Markets
An Overview of the Euro’s Performance in the Forex Markets
Six Trading Tips for the Forex Newbie
The Lowdown on Day Trading
Interpreting How Interest Rates Drive the Foreign Exchange Markets
The Basics of the Bollinger Band Technical Indicator in Forex Markets
Relative Strength Analysis in Forex Trading
The Basics on Understanding Forex Options
Forex Charts – What Are They and How Do You Read Them
Interpreting the Future of the Oil Marketplace and How It Affects Forex Trading
Top Five Economic Indicators that Drive Forex Trading
Rules for Trading in Forex Markets
How Does the Japanese Yen Stack Up Against the US Dollar in Forex Markets
Pivot Points in Forex
The Ins and Outs of Trying Out a Forex Demo Account
The Top Currencies to Watch in the Forex Trading Game
Defining Moments Regarding Trading Trends and Ranges with Forex
Top Ten Basic Terms in Forex Trading and Their Definitions
Forex Folklore Investment Myths in the Market
Five Economic Driving Forces that Influence Forex Trading
Day Trading All You Wish You Did Not Have to Know
Time line for Daily Forex Trading When are the Optimum Moments
Forex Relative Strength Analysis
How Forex Quotes Can Influence your Trading Tactics
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