I exploit value motion based mostly buying and selling methods in my foreign currency trading, and I have discovered this method to be very efficient. When I began foreign currency trading, I started utilizing most of these methods. However, on the time, I did not even know the title for what I used to be doing. See, I by no means even studied the extra in-depth technical indicators. From the start, I traded based mostly on value actions, day by day excessive/lows, time-based recurring patterns and such. I suppose I used to be fortunate as I had an excellent mentor after I began buying and selling foreign exchange, and this individual directed me to cost based mostly buying and selling methods from the beginning. Since then, I have interviewed and browse the books of many full time profitable foreign exchange merchants. It appears to me to this point, that “home-based” merchants who’re probably the most profitable are additionally utilizing priced motion methods.
When I see merchants scrutinizing and drawing advanced traces on charts, discussing Bollinger bands, and analyzing candlesticks, I believe – “Why are they working so hard when they can get a more reliable outcome with simpler strategies?” Of course, they assume I’m unusual too. It’s okay, although. There are methods for various personalities, and everybody has completely different goals for why they commerce and completely different targets for his or her buying and selling. The major desired final result, whether or not you utilize advanced technical evaluation or easy value motion methods is that you simply earn extra pips than you lose.
When you start studying about methods for foreign currency trading, you’re prone to study fibonacci and EMAs and all of the advanced techical evaluation that could be utilized to the foreign exchange market. It is necessary to grasp, that though these conventional technical evaluation indicators are useful, all of these indicators are thought-about to be “lagging indicators.” A lagging indicator seems solely after the worth sample has modified or a brand new pattern has already been set. Traders preferring value motion methods imagine that precise value actions inside sure time frames are extra predictive of what’s going to occur within the short-term buying and selling situation.
So what particularly is a value motion based mostly foreign exchange technique? Basically, it’s a technique with entry and exits based mostly on “rules” ; and the foundations are based mostly on the precise foreign money actions inside a specified timeframe. Often instances the technique may have particular guidelines associated to a particular foreign money pair. For instance, the next is perhaps thought-about a value motion based mostly technique (by the best way, that is an efficient and easy technique:)
1. Observe the EUR/USD from 8:00 am to eight:30 am Eastern Time within the morning.
2. Take word of the excessive and low factors throughout this 30 minute timeframe.
3. When the EUR/USD breaks by means of the excessive or low level by no less than 10 pips, provoke the commerce within the course of the break.
4. Set a 40 pip SL and a 40 pip take revenue.
As exemplified above, value based mostly motion methods have very particular guidelines when to enter and shut a commerce. As this instance reveals, the methods are very particular, and embody guidelines for when to enter, when to exit, and tips on how to handle losses. This makes the methods quite simple to implement, even for the novice dealer – as no advanced technical evaluation is critical.
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