The big trends in Forex can last for many weeks, months or even years but how do you get in on a trend, that’s already in motion? Here are two powerful methods you can use for bigger Forex profits.
Let’s look at both methods, neither is better than the other and whichever presents itself first, you can use it.
1. Buy Breakouts
All bull trends start and continue from new market highs, so just buy breaks of resistance. All you need to do is see that the level has been tested a few times and when it breaks – buy the break. This may sound simple and it is – but look at any currency chart and you will see how effective it is.
Always make sure the level has been tested at least twice ( but the more times the better and the wider apart these tests are in terms of time the better they tend to be) When the breakout occurs, you go long and your stop is close – right behind the breakout point.
2. Buy Dips to the 20 day Moving Average
Markets will always move to overbought levels as greed and fear push prices to far and then come back to an average price and then move to overbought and re trace and you will see this in ANY market. So what is a good moving average to use?
In strong bull markets prices will tend to dip back to the 20 day moving average and we always like to use dips to the middle band of a Bollinger Band which also shows the volatility of the market. If you have never used a Bollinger band, learn about it, it will only take you a few hours and it’s a great Forex trading indicator.
When the dip occurs put your stop behind nearby support and wait for prices to start rising again and get long.
ALWAYS REMEMBER!
The big profits are made from the big trends and many traders simply think they have missed the initial entry and ignore the trend – but when trends last weeks, months or years! You will always get numerous low risk, high reward, entry points using the two methods above methods – so use them and make bigger Forex profits.