Cashing in on short-term CURRENCY TRENDS

Authors: TIMOTHY O’SULLIVAN | 0 Comments
Cashing in on short-term CURRENCY TRENDS

Many technical trading strategies revolve around the assumption that markets will hover within a given range — and with good reason. Seventy percent of the time
markets will bounce back and forth between support and resistance levels, or fluctuate randomly. The rest of the time, market behavior is characterized by persistent price moves — trends — that shatter support and resistance levels.

Although these basic probabilities work against traders who try to exploit trends, the potential rewards can be worth the risk. It is possible to increase your ability to capitalize on t rends by locating trend signals, identifying specific entry points within the trend and using risk management techniques to limit losses.

The following sections will explain how a trading system based on these concepts works especially well in the foreign exchange (Forex), or currency, market, particularly with the “major” currencies — the U.S. dollar, Euro, Japanese yen, British pound, Swiss franc, Canadian dollar and Australian dollar. More than 85 percent of transactions in the $1 trillion per day Forex market involve the majors.

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