Here we are going to look at the best Forex trading strategy in terms of one which is easy to learn and can make huge gains. Anyone can master this simple strategy quickly and soon be making a triple digit income so, let’s take a look at it in more detail.
Currency prices are made by traders and while they all have the same information and news to look at, they all have a different view and the view of all traders is a reflection of their emotions. Because humans are emotional, they will always push prices to far to fast then, prices come back to more realistic levels and you will see this on any currency chart in the form of a sharp accelerated price spike which never lasts.
The trading strategy we will look at here is based upon selling into these overbought levels and then taking a quick profit, as prices come back to fair value and the strategy we will look at is known as swing trading.
So let’s look at how to apply the strategy in practice.
First you need to look at a chart of the currency and watch for a price spike that is accelerating to the upside, you now need to look to get in and short the market but you need to time your trading signal, so lets look at how to do this.
When a price is rising strongly the momentum behind the move is strong and there are a number of indicators which measure how strong the momentum is and good indicators to use are the RSI, MACD and stochastic. We have written about these in other articles so look them up and you will find there all easy to learn.
When greed is driving prices, momentum and price will be rising together and they will push prices to overbought levels, once prices become overbought in terms of momentum, you need to get ready to short and simply wait until momentum starts to fall and prices are still rising then – you go short.
Put a stop above resistance and have a downside target above support and when you get to just above this level, take profit you take your profit – dont wait for an test of the support level, in case of a spike back up against you.
When swing trading a currency pair you need to be patient and only trade extremes and in a month, you will get a couple of potential trade opportunities per currency pair.
By being patient and only trading extremes, you will be trading the best risk reward trades and can easily make triple digit annual gains.