2Bull Forex Blog

Human nature is constant and humans determine the price in any market, therefore if you know the law of human nature you have a scientific theory you can apply, to predict prices and make big profits. Let’s look at some forex trading systems based on scientific movement.

There are numerous theories that are said to be scientific and three of the most common are Fibonacci, Elliot Wave and WD Gann. They all claim to be able to predict forex prices in advance but how successful are they?

The problem with these theories is they are all flawed and none of the above made any profits with the theories and they developed them! – So why don’t they work?

Because while human nature is constant, it’s not predictable with scientific accuracy.

Humans are not creatures of logic – but creatures of emotion and that means there is no formula that can be applied to this vast, diverse group that will work.

This is actually pretty obvious as if there were a scientific theory of market movement that worked all the time, we would all know the price in advance and there would be no market as of course we would all know the price in advance!

Prices actually move because we are unpredictable and this is the basis of any free market.

A BETTER WAY TO MAKE FOREX PROFITS

If you try and predict forex prices ( not just with a scientific theory) you are destined to lose anyway because prediction is really another word for hoping and guessing and that won’t get you very far in life and especially not in forex trading!

You can’t predict so don’t even try, as your predictions will end up being as accurate as your horoscope.

A better way to trade is to hit high odds set ups, in fact – it’s the only way to trade.

You are playing a game of odds not certainties – but that doesn’t mean you can’t make big profits, you can and the rewards are enormous.

Keep in mind the following fact when you trade forex:

All prices are pushed to far up or down by human emotion and then return to fair value. If you can spot and act on these price spikes, you can make huge profits and there easy to spot on a forex chart. You simply wait until the price spikes and then look for a waning of momentum and hit your trading signal – in the opposite direction.

This happens time and time again in forex markets (or any market for that matter), these price spikes fade and if you can catch them you have great profit potential with low risk.

Once a trend does develop you trade with it – but there are always price spikes along the way (within trends) for swing trading or (at the end of trends) for long term trend followers.

Forex trading has not changed over the years.

Despite the vast amount of progress we have made in science in other areas of life forex trading remains an odds game where the appliance of science won’t help you – but simply trading the odds will and can lead you to currency trading success.

If you want to catch the big profits in forex trading you need to trend follow forex trends which are longer term. Here we are going to give you a 3 step simple method which if you use it correctly, will help you catch every major forex trend and lead you to long term currency trading success.

Most novice traders don’t bother trying to trend following forex longer term – instead they try forex scalping or day trading. These methods focus the trader on small moves and they hope to catch small profits however as most short term moves are random, this leads to equity wipe out.

The other choices are swing trading and long term forex trend following and this article is all about the latter method.

If you look at any forex chart, you will see long term trends that last for months or years. These moves can and do yield big profits – here we will outline a simple method to catch them.

Breakouts

By far the best way of catching the big moves is to use a forex trading strategy based around breakouts. A breakout is simply a move on a forex chart where a new high or low is made and resistance or support is broken.

It’s a fact that most major moves start from new highs or lows.

While it might appear that you are not buying or selling at the best level, you are in terms of the odds of the trend continuing. Most forex traders make the mistake of waiting for the breakout to come back and get in at a better price but these traders never get on board. The reason for this is if a breakout occurs, then you have a new strong trend and a pullback is not very likely to occur.

Most traders don’t buy or sell breakouts and that’s exactly why it’s such a powerful method.

The only point to keep in mind is a support or resistance which is broken, should be valid and that means at least 3 points in at least 2 different times frames. The more tests and the wider the spacing between the tests the more valid the level is.

Confirmation

Of course not every breakout continues and some reverse, these are false and can cause losses. You therefore need to confirm each move. All you need to do to achieve this is to put a few momentum indicators in your forex trading system to confirm your trading signal.

These indicators give you an idea of the strength and velocity of price and there are many to choose from. We don’t have time to discuss them here (simply look up our other articles) but two of the best are – the stochastic and Relative Strength Index RSI

Stops and Targets

Stop levels are easy with breakouts – Simply behind the breakout point.

If you have a big trend then you need to be careful you can milk it, so don’t move your stop to soon and keep it outside of normal volatility.

If it is a big move, trailing stops should be held a long way back and the 40 day moving average is a good level to use.

You have to keep in mind that when the trend does eventually turn you are going to give some profit back. You don’t know when the trend is going to end, so don’t predict.

It’s ok to give a big back, as that’s the nature of trading forex. Keep in mind if you got 50% of every major trend you would be very rich.

When you are long term trend following you have accept giving a bit back and taking dips in open equity as the trend develops – this is noise and does not affect the long term trend.

The above is a simple way to trend follow forex and catch the high odds moves that yield the big profits. If you are learning forex trading and want a simple method that is robust and will help you catch every major move, then you should base your Trading on the above method.

As you know, the Forex market operates 24 hours, 5 days a week. This is one of the strong points of currency trading for retail traders: you can find good trade setups at almost any time of the day.

However, what many amateur traders fail to remember is that not every single hour of the day is a good time to trade. In this article, I will point out the best times to trade Forex, and why.

What Are The Conditions For Favorable Trading?

Generally speaking, you’ll want to enter into trades when there is high liquidity in the market. High liquidity helps to reduce slippage, while at the same time providing better opportunities for large market moves and thus larger profits.

In times of low liquidity when relatively few traders are active, market prices are usually flat. This reduces your chances of making money since you’ll need the market to move in order to profit.

Another reason why you should trade during times of high liquidity is because the large trading volume makes it harder (and more expensive) for the financial institutions to artificially manipulate market prices. Stop-loss hunting for example, is much more expensive to carry out during times of high liquidity.

Here are the times when liquidity in the market is typically the highest:

The London Session

The London market opens at 8am GMT (3am EST) and closes at 4pm GMT (11am EST). Most of the daily trading volume occurs during this time.
The currencies most actively traded during this period are the USD, EUR, GBP, CHF and JPY.

The New York Session

New York opens at 1pm GMT (8am EST) and closes at 8pm GMT (3pm EST). This is the second largest trading period in terms of transaction volume.

The Asian Session

Last but not least, the Asian session opens in Tokyo at 1am GMT (8pm EST) and closes at 8am GMT (3am EST). Compared to the London and New York sessions, the Asian session usually experiences less volatility in the market. However, some good currency moves may be observed every now and then.