2Bull Forex Blog

Recently I wrote some articles and outlined 2 x trades using both fundamentals and technical inputs combined. The trades made nearly 1,000 pips and you can look them up and see. Most traders think you can’t use both – but you can. Here I will show you how to do it and target triple digit gains.

Let’s first look at a simple equation for forex price movement.

Supply and Demand Facts + Investor Perception of = Price

Traders Make a Price

So it’s not the facts that are important by themselves, it’s all the investors trading opinions of them combined that gives us the final price

Now it’s a fact that markets do move to the long term fundamentals – but the traders make their trades based upon their knowledge and their emotions. They will as always, push prices away from fair value and the long term fundamentals.

A look at any forex chart will show you that these spikes always end and prices come back to fair value.

Seeing the News in a Different Way to the Majority

So how do we get advance warning that prices have been pushed to far?

Not by a chart – that just tells you what is happening not what may happen. To get clues to the future you need to look at the market sentiment and try and judge if prices have been pushed to far or not.

Many traders try and trade the news and the opinions of so called experts – but this is a waste of time. These are just opinions and reflect the crowd psychology.

What you want to look for is – when the price is out of step with the fundamentals and greed and fear have taken hold and this is easy to spot:

• Watch for a general view there is no top or bottom in sight
• Watch for news that should be bullish or bearish which fails to move the market the way it should. If bullish news fails to rally a market for example this is telling you what may happen next
• Check a key technical level and use your forex charts to key off it and do the opposite of the majority

Judge Sentiment and Win Big

Sentiment is the key to where markets go and you don’t look at the news from the perspective of what is said – but how price reacts to it.

You are looking for the Opposite of everyone else.

It’s then time to time your entry with technical tools and use support and resistance to key off.

Prices don’t move to fundamentals so you shouldn’t use it on its own. Prices also don’t move to some hocus pocus repetitive scientific number sequence either. Forex markets are an odds game and you need to judge sentiment to win.

You can only do this by combining both disciplines and if you don’t believe it works – check out my 2 recent articles which made nearly 1,000 pips in less than two weeks.

If you use fundamentals and technical and learn to use them the right way you can make huge gains.

Here I am going to look at a trading opportunity shaping up right now, which could make 200 pips or more and the risk to reward is good, let’s take a look at it.

Here we are going to look at the big fundamental picture to get an idea of where the pair maybe going and use some simple technical tools to look for an entry point.

The dollar has broken higher against all the major currencies but its gains against the yen have been limited but it has broken above a key level – the 108.00 level which was major resistance, now this will act as strong support.

On the break, it went quickly to the 110.00 level and at the time of writing is trading at 108.58 – in other words:

Its coming back to test the breakout point and this is creating a low risk high reward profit opportunity.

Confirm the Move with Momentum

If you pull up any free chart service and look at the stochastic and Relative Strength Index (RSI), these momentum indicators and at present both are pointing down indicating weakness in the short term. Now you should not try to buy the dollar UNTIL Momentum moves to the upside, confirming support has held.

This means both the RSI and stochastic turn up and the price bounces up.

You don’t want to just hope the level holds, you are confirming it and trading the reality, another push up to the 110.00 level is on the cards.

If you want a fuller description of how these indicators work we have covered them in other articles so read them.

The Fundamentals

The backdrop to the technical picture is a fundamental picture that is turning firmly bullish. While the Japanese economy verges on recession, the US economy is starting to show signs of life.

The Yen has another problem – interest rates are the lowest of any major G7 and cannot be cut to stimulate economic growth and raising them is not really an option.

On the other hand, the US after the recent slashing of interest rates will be starting to raise rates.

Low Risk Great Upside Potential

Therefore we have the economic backdrop and interest rates firmly in favour of the dollar and chances are it will hold the breakout point. You don’t do anything until momentum turns up to confirm the move – if it does you have a great low risk.

You know you are wrong if the price CLOSES below the breakout point.

Trading is all about balancing the risk reward and this trade has limited risk and the upside is 200 pips in the first instance but if this does become a new dollar bull trend the profit could be 1,000 pips or more.

Take a look at this opportunity and see what you think.

The really big profits come from catching and holding the big long term currency trends which can last for weeks, months or years and this article is all about turning these trends into triple digit profits…

If you look at any forex chart, you will see long term trends and here is a simple forex trading strategy for turning them into profits.

Learn How to Use Breakouts

The first point is most new trends and continuations, start from new market highs.

If you want to make money then you need to buy breakouts.

Most traders make the mistake of waiting for prices to pullback to get in at a better “price” but the move doesn’t in most instances it continues, so you must learn to buy breakouts – if you want to get on the side of the big trends.

Valid Breakouts

Not all breakouts have the same odds of success and you need to be selective in your choice to catch the best ones.

Generally, a breakout is valid if the breakout point, has been tested several times
(the more times the better) and if this has occurred in different time frames which are spaced wide apart, that adds to the validity of the resistance.

You are generally looking levels the market participants consider important and when the level breaks look to go with the breakout. You don’t just buy though, you need to check momentum.

Confirmationколи под наем

Momentum indicators are discussed in our other articles but they simply allow you to gauge the strength of momentum and if its rising then chances are the breakout is valid and will continue. You only need one or two to confirm and our favourites are the RSI and stochastic. There visual indicators and easy to learn and apply.

Applying the Stop

Applying the stop is easy it’s under the breakout as the previous resistance broken will now act as support.

The Key to Making Triple Digit Gains!

Is how you trail your stop remember if you have had a valid breakout chances are it will last a long time weeks or months and you need to stay in the trend. Most traders get so excited when they have a profit; they want to lock it in and protect it and move their stop up to quickly. They then get knocked out of the trade by random volatility, get a marginal profit next, then they see the trend sail on over the horizon, piling up thousands of dollars in profit and their not in!

Keep your stop back and trail it slowly.

You need to give the market room to breathe and accept drawdown in the short term and keep your eyes on the bigger long term prize, when you bank.

A good way to do this is by using key moving averages.

Generally dips to the 20 day are areas you can load up more trades in the direction of the trend and the 40 day MA, is a good area to have your stop in line with nearby trend line support as its outside of random volatility and will keep you in the trend.

Sure you give a bit back at the end but if you got 50% of every major trend you would be very rich.

A Simple, Time Efficient Way to make Triple Digit Profits

The above is a simple way to make money from long term trends and I know traders who make 100% annual gains doing the above. Another advantage of this type of trading is it takes less than 30 minutes a day. You also don’t have to worry about watching prices all the time and you don’t have to trade often.

Long term trend following can be very profitable if you follow the above tips and there easy to do.

What are the best currencies to trade? Here we will answer this question and also look at a few over looked currencies and in particular one of the best for novice traders.

Here we are going to look at the best currencies against the US Dollar.

Perhaps the most important consideration is turnover and liquidity of the currency traded. and these currencies also offer the tightest pip spreads which reduce your cost of doing business. You can trade the majors for just 2 or 3 pips and the currencies with the highest volume against the dollar are.

- The Euro
- The Japanese Yen
- The British Pound
- The Swiss Franc

Any trader should consider the above 4 and the euro and the yen are favorites for most traders and will work well for swing traders or trend followers.

I trade the euro, yen and Pound but not the Swiss Franc – nothing against it, it’s a great trending currency but it tracks the euro to a degree now as the country has become more integrated with Europe so I have picked the euro.

Two other great currencies to trade are, the Australian and Canadian Dollar.

They don’t have the volume of the big 4 and spreads are a little wider but for trend followers they offer some excellent trends and with both being commodity currencies, they have given some great trends over the last few years with the recent surge in commodity prices.

If I was to pick a currency that is good for novices, it wouldn’t be the euro or the yen – but the Canadian dollar.

It works well on any technical system and offers reliable trends and the major advantage is it lacks the frequent volatility spikes you see in the big two

Of course any list of best currencies to trade is going to be subjective but if you are a novice trader or trading the majors and want a change, check out the Canadian dollar – it really is a great currency to trade.

An essential element of your forex trading education is using valid support and resistance to time your trading signal. Here we are going to walk you through a live example of how to use it properly.

The currency we are going to look at on our forex charts is the Japanese yen.

If you look at the yen daily chart, you will see a very valid resistance level at the 108.00 level and since March of this year there have been numerous tests of it, over 20 and yet the dollar has failed to close above it supported by momentum.

This resistance is very valid because there have been so many tests. Resistance or support gain validity

- The more times they are tested and hold
- The more different time frames and the wider apart they are
- The traders who trade the market and the news sees the level as significant

Watch the level then confirm the Trade

The way to trade it is to wait for the rise but DON’T sell until you see momentum turn down and two great indicators for timing your trade are the stochastic and the Relative Strength Index. Simply wait for the level to be tested and wait for them to turn down.

Never just assume a level will hold, wait for confirmation via momentum indicators.

Once this occurs you can be short and you know when you’re wrong – if prices close above resistance.

This simple method of trading into valid resistance or support works and providing you time your entry correctly with momentum indicators, it can make a lot of money.

We have used this simple strategy to clear thousands of pips profits, this year and we have kept it simple, nothing complicated about it but it doesn’t mean it simple strategies can’t make money they can.

While resistance holds you keep doing it sell into the level and take profits when the dollar becomes oversold, then wait for the next test.

Follow Reality of Price Change

If the price breaks up and closes strongly above resistance, the odds will favour further strength in the dollar.

Simple and Effective

Sure it’s simple but it can be very profitable and the above is a good example of a low risk, high reward way of trading into valid resistance.

You don’t need to do anything else, than trade the reality of price change on the charts and if you do and you confirm your moves this simple forex trading strategy can make a lot of money.