For the savvy forex trader the best opportunities are at big market turning points. Although the majority never spot them they offer the highest reward and the lowest risk and if you can spot them you can enjoy forex trading success.
A market (any financial market not just currency trading) moves to this equation
Market Fundamentals + Human Perception = Price
It’s a fact that humans are not creatures of logic but of greed and fear and they always push prices to far up or down away from the fundamentals and then prices return to more realistic values.
All short term, accelerated price spikes in forex trading are short lived and prices tend to turn when the fundamentals are most bullish or bearish and that has been true since the start of trading.
The majority of losing forex traders get caught at these turning points (95%) and the savvy pros make a killing – so how do you spot these changes and enjoy currency trading success?
They can be seen on any forex chart and if you have the right technical tools you can act on them and get your market timing right and execute a great contrary trade.
Here are some clues on how to spot these turning points.
Watch for a forex trend that is moving quickly and accelerating upwards, moving based upon bullish or bearish news that says there is no end in sight.
Next watch for high volatility and a great way to spot this is a price at the outer Bollinger Bands or beyond it.
Now you can be alert for a trend change.
You don’t predict you wait for confirmation and check 3 other indicators (all the indicators here are discussed in our other articles so look them up)
Look for the ADX Line to be above 40 combined with RSI in overbought territory.
Now Confirm Your Trading Signal
To trigger the move, watch for a stochastic reading to cross down with bearish divergence (in a bull market) or up with bullish divergence (in a bear market), to trigger a sell from overbought or oversold levels.
This set up is even better if it has been preceded by an ADX signal turning down from above 40.
Trading Price Momentum Divergence
The above tools if used in the above way, in a forex trading system, on strong bull or bear markets, will help you catch a counter trend as the bullish or bearish news peaks and momentum diverges with price.
With a little practice you will never miss a big turning point again also, the more volatile and exaggerated the move the better!
100% + Profits
These are what I call the 10:1 trades and they will normally see the amount of potential reward to be 10 times the risk.
Most traders can’t do the above.
They get influenced by the herd and the news – but if you stay detached watch your charts and execute your forex trading system with discipline, you can pile up huge profits.
Emotional Price Spikes Will ALWAYS Occur
Human nature is constant and humans always push prices to far up or down – so this method will always work.
Savvy forex traders and make sure their smiling and making big profits while the losing majority get hammered.
If you want to enjoy forex trading success, practice the above and you will soon be piling up some big FX profits.