Sunday, October 29, 2006
Forex Day Trading System - A strong technique to day trade
Forex Day Trading System - A strong technique to day trade
In continuation to last post in which few characterstics of day trading and a typical day trader..In this post, lets go through a simple, yet a very strong and popular forex day trading system.. -
Quite a few day traders use the technique of support and resistance, which as I mentioned in my previous posts is nothing but the points from where the currency pair rebounds consistently..If the downward going currency pair bounces from a particular level again and again, thats a support level and reverse is true for upward currency pair, where the level is called resistence..
Lets see how to use it..
Most of the successful day traders before placing a trade in London or US trading session, generally prepare a trading plan where they analyse a chart (generally a 5 min. or 15 min. chart). The ones that use this technique, they try to identify the support and resistance levels of they day..These support levels will be the one which currency pair is not able to break free for few hours..The support/resistence levels could be a horizontal line or it could be angled (Channel line)..
Once identified, they wait till the time currency pair hits one of these levels. As soon as that happens, it is important to note what happens next..For e.g. if the currency pair is near a support level, and if the support line is broken, then a short trade is opened with stop 5-10 pips above the support level and target as the next support level..Care is taken that the next support level is atleast so much away that its worth placing a trade..If for e.g. the next support is just 5 pips away, there is no point in opening this trade..
In case the support line is not broken and the trade goes in other direction which is typical range trading situation, the long trade is opened and stop is placed below support with resistance as the target..
Please refer to the chart for example..when the pair broke the resistance, the trade could have been placed at price indicated by red circle and a nice sweet profit could have been realized..
Thats all in today's session of Forex day Trading System..An other system will be uncovered in the next post..
In continuation to last post in which few characterstics of day trading and a typical day trader..In this post, lets go through a simple, yet a very strong and popular forex day trading system.. -
Quite a few day traders use the technique of support and resistance, which as I mentioned in my previous posts is nothing but the points from where the currency pair rebounds consistently..If the downward going currency pair bounces from a particular level again and again, thats a support level and reverse is true for upward currency pair, where the level is called resistence..
Lets see how to use it..
Most of the successful day traders before placing a trade in London or US trading session, generally prepare a trading plan where they analyse a chart (generally a 5 min. or 15 min. chart). The ones that use this technique, they try to identify the support and resistance levels of they day..These support levels will be the one which currency pair is not able to break free for few hours..The support/resistence levels could be a horizontal line or it could be angled (Channel line)..
Once identified, they wait till the time currency pair hits one of these levels. As soon as that happens, it is important to note what happens next..For e.g. if the currency pair is near a support level, and if the support line is broken, then a short trade is opened with stop 5-10 pips above the support level and target as the next support level..Care is taken that the next support level is atleast so much away that its worth placing a trade..If for e.g. the next support is just 5 pips away, there is no point in opening this trade..
In case the support line is not broken and the trade goes in other direction which is typical range trading situation, the long trade is opened and stop is placed below support with resistance as the target..
Please refer to the chart for example..when the pair broke the resistance, the trade could have been placed at price indicated by red circle and a nice sweet profit could have been realized..
Thats all in today's session of Forex day Trading System..An other system will be uncovered in the next post..
