A live short trade of the British Pound illustrates
how a forex trading strategy that runs counter to market consensus can
result in a low risk-high reward trade that can bring big profits for
the forex trader. Still using the July 24th 9:30am CET timeframe, you
can see how the short position has resulted in profits from an
overbought market that has speculators taking long positions in
expectation of a continued rally. Indicators show that such market is
likely to go into a correction in the near term. So, while the market
consensus takes to a continuation of the momentum, a forex trader who
puts a stop to his trading system can set up a profitable trade.
After
the breakout in the trend manifests, the question of where the currency
will move next still remains. In the meantime, those with long
positions are washed out causing the British Pound to go on a downward
slide. Shorts were covered with a scant profit but Bollinger Band
mid-section targeting was met signalling a good long side re-entry. The
strategy is to watch the lower Bollinger Band and the 1.9600 level to
re-enter the trade.
A key lesson in this trade is to watch the
price momentum and the forex trading indicators to get the right signal
for entry or exit into a trade. There is no absolute way to predict
exactly how the market will behave. Reading the charts and using
indicators in timing the trades can work for a successful and
profitable trading business. Avoiding premature stops by waiting for
confirmation of the signals is one way of making big profits in the
forex market.
Timothy Stevens is a Forex Options Trader who owns http://www.NonDirectionTrading.com - He has helped hundreds of people on Trading Forex with Options.
He
has recently developed a free e-course showing you a step by step
process for starting your Forex Trading easier. To learn how to start
Forex Trading with Options without wasting your time and losing more
money, visit http://www.NonDirectionTrading.com/members/FreeReport.htm
