Sunday, November 7, 2010

Simple Forex Trading System — A Simple Method Anyone Can Learn for Triple Digit Gains

Here we will look at a simple Forex trading system which works and will always work — why? Because its based on human nature and that will never change. When your using the system, you will be taking advantage of the losing 95% of traders to pocket yourself a triple digit income in just 30 minutes a day — let’s take a look at the system.

Humans are not logical and those people who tell you, they can predict Forex price movement in advance are wrong. So if you can’t predict what people will do how do you win? Simple — you trade high odds set ups and you keep losses small and run your winning trades and if you do this you can make huge gains. The simple Forex trading system, we are going to look at here does just that — so lets look at the logic behind it and some simple tips for success.

Greed and fear are present in the bulk of traders and these emotions will push prices to far up or down and away from value, when this occurs you trade opposite to the herd and make big money. You can see emotions at work on Forex charts in the form of short sharp accelerations in price and you will also notice they soon reverse. The key to winning of course is timing your trading signal.

In the example below, we will look at a bull market but the same logic will occur in a bear market.

Keep an eye on your charts and look for a price spike which suddenly explodes prices to the upside and you will normally find when these happen the news is telling you move will continue and then get ready to sell.

- To time your trading signal look at momentum. If prices are rising strongly momentum will normally be going up as well and you can see this on momentum indicators such as the stochastic, the RSI and the MACD. Look for these indicators to be overbought and even better, to be near an extreme on a daily chart and wait for momentum to fall, as prices continue to rise. This is known as bearish divergence and means it’s time to sell.

- Once you have sold put stop loss protection in above resistance and wait for prices to fall and then, as they fall, move your stop to break even and then set a downside target and take profit.

- Within existing trends, you will always get brief spikes up which go to far ahead of the trend and you can trade these and when you do its known as swing trading and trades will last a day to around a week. When a trend ends, the same reversal pattern is there but if you catch a trend reversal and a new trend develops, you will be getting into a trend which can last for many weeks or many months.

If you trade into greed, when the majority believe the move will continue and these traders are bullish, chances are you will make a big profit because the majority is always wrong. This simple trading system can be used for short term or longer term trading and while its simple, works and makes huge gains.

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