How Prices Really Move | ForexGen

We will going to look at how and why prices move and how to win. Most traders make the mistake of thinking prices move to news stories and try and trade them or to some scientific theory - they don't. foreign exchange prices are chaos - but that doesn't mean you can't win, you can and to do so, you must understand the key point of this article...

Here is the equation for market movement

Fundamentals (Supply and Demand) + Investor Perception of = Price

While the above sounds simple and it is most traders don't understand that the facts are NOT important it is how they are perceived by all the investors as a whole that is important.

Many people trade breaking news but it won't help you as it's discounted immediately and furthermore, investors are always looking to the future. To illustrate this think about this fact:

Market bottoms normally occur when the news is most bearish and market tops, when the news is most bullish.

The fundamentals are important long term - but in the short term prices are determined by the greed and fear of the investors, it's what they all think as group that determines price.

Many traders think because human nature is constant, there is a scientific theory of market movement - but of course there isn't. If there was, we would all know the price in advance and there would be no market at all.

Foreign exchange is an odds game and your aim is to trade high odds set ups, when the patterns of Foreign exchange price movement dictate you should and the best way to do this is to use a simple robust trend following forex trading system.

Foreign exchange charts show you the supply and demand situation (they simply assume that all fundamentals show up in price action) but they do so something more - they tell you how all the investors perceive them.

Foreign exchange charting and technical analysis is not a science, it's an art. You're in fact, playing a similar role to a good poker player. You are looking to bet big on high odds sets, fold ones that don't go right and pass by low odds set ups.

Just like the poker player, you won't win every hand - but if you play the odds, you can win more than you lose and make a lot of money.

Forex charting is easy to learn and if you make it part of your forex education, you can learn it in about 2 weeks and get a robust Foreign exchange trading strategy together which, you can apply in around 30 minutes a day.

If you can master it Foreign exchange charting and spot high odds forex price movement patterns, the rewards are huge.

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Forex Trend Following with ForexGen

The most lucrative form of trading is locking into and following long term trends in forex that can last for months or years. Most traders have no idea how to profit from forex trend following so we will show you how to do it in 5 simple steps.
1. Be Selective
The first point to keep in mind is that the big trades don’t come around very often so you need to be patient and selective. You don’t get rewarded for trading frequently; you get rewarded for being right.
You can trade less than a dozen times a year and make triple digit gains, if you pick the right trades. So don’t be tempted to get in the market for the sake of it be patient.
2. Watch Breakouts
Forget buying low and selling high – most great trends start from new market highs and you have to be ready to buy these breaks.
If you wait for a pullback you will simply miss the best trends, because when a new trend breaks out - it moves quickly.
The best risk/ reward is offered on the these breaks. Most traders can’t buy breakouts, as they want to buy at a lower better price and wait for a pullback and they never get in and miss the trade.
3. Use a Simple System
To trend follow and catch breakouts you don’t need a complicated system.
All you need to understand are basic trend lines and the concept of support and resistance and that’s it.
A simple forex trading system is best, as it’s easy to understand and easy to apply – if you complicate your system, it will be less robust and will have too many elements which will break in trading.
All the best forex trading systems are simple and yours should be to.
4. Trade Valid Support and resistance only
Keep in mind, you only want to trade breaks that are considered important by the market.
This means that levels have been tested several times, in at least two time frames, preferably a few months.
When these levels are broken, chances are there are stops behind the level wating to be hit and new trend followers waiting to kick in which will accelerate the price trend.
5. Confirm – Confirm – Confirm!
Make sure that any breakout is confirmed by momentum oscillators – this will ensure you filter out false breakouts.
If you are not trading with price momentum, you’re not trading the odds and you won’t win – period.
Only take breakouts confirmed by a rise in price momentum.
We don’t have time to discuss the indicators to use here - but look up: RSI, ADX and the stochastic, as a good place to start.
6. Accept Short Term volatility
Breakout trading can see huge volatility after the initial breakout has occurred, don’t be tempted to move your stop to quickly WAIT.
You’re trying to catch the big trends so accept that you will see counter moves eat into your profits by several thousand a day.
If you want to catch the big trends and make $10, $20, $30,000 or more - accept the drawdowns in the short term and keep your eyes on the bigger prize if you dont you will be stopped out early and miss the big profit you were aiming at.
So there you have it.
A simple, logical system, that can and will pile up huge profits in under an hour a day.
You won’t have to spend much time on this system and you won’t trade very often – but you will make a lot of money and that at the end of the day, is what forex trading is all about.