As in many other markets, technical analysis has become very popular in the foreign exchange market. At the core of its popularity is huge liquidity created by the market and around-the-clock trade 1.4 trillion. $ Daily amount. A lot of participants and a significant amount of money that passes through the market every day, implies that market-based instruments, namely the currency pairs, rarely spend too much time in a narrow trading ranges and have a tendency to develop strong trends. In addition, more than 80% of the volume is speculative in nature and, as a result, the market often reaches extreme levels, and then adjusted. New trends and possible breakthroughs occur frequently, and provide multiple opportunities for the technically educated traders to enter and exit positions. Opportunities are not limited to trade on the trend, as well as quite often there are opportunities for trade in the range, allowing traders to effectively sell to the top of the grounds and bands.
In this article we wish to consider one based on the technology strategy that works particularly well in the foreign exchange market. The proposed strategy is based on the trade to intra-day trend and prednazna Chen to capture the counter-trend movement of the round values to the currency market known as "figures". This strategy involves an attempt to take advantage of the tendency of many market participants to place orders at or near the big round numbers.
The natural psychological tendency to make round numbers especially attractive to speculators, while the larger players, or a corporation that is involved in trade in the currency market for the purpose of hedging, may prefer to round numbers for the purpose of convenience of calculation. Irrespective of this, short-term counter-trend movement of round numbers occur frequently. Here are the rules for this strategy:
Long position:
• determined by the location of the currency pair that is trading significantly below its intra-day 20-periodnoy simple moving average. It may be 5 -, 10 - or 15-minute schedule.
• a long position when the currency pair is on a few points below the figure.
• hosted an initial protective stop order is not more than 15 points lower input prices.
• when the position becomes profitable on the initial risk, rose half position, while the remaining part of the position of the stop order is moved to break-even level. The freeze order is moved, as the price moves in your favor.
Short positions:
• determined by the location of the currency pair, which has traded above its intra-day 20-periodnoy simple moving average. It may be 5 -, 10 - or 15-minute schedule.
• a short position when the currency pair is on a few points above the figure.
• hosted an initial protective stop order is not more than 15 points higher input prices.
• when the position becomes profitable on the initial risk, rose half position, while the remaining part of the position of the stop order is moved to break-even level. The freeze order is moved, as the price moves in your favor.
This strategy essentially puts you on the same side, where the inter-bank players with access to the flow of orders. The strategy has a greater chance of success, when another important level of support or resistance, such as simple moving averages, Fibonacci levels, or bands Bollindzhera, converge just to the figure.
24-hour nature of the market, which is unique for currency trading, provides an additional advantage for the technical traders. Experienced traders know that at certain times of the day, some currency pairs have a higher probability of trading in a range or a high probability that the break from the intra-day consolidation. For example, the British pound tends to be traded more actively in the European and the London trading session, but kept in a narrow trading range during the Asian and U.S. sessions. Typical intra-day trading strategy for the British pound in this case should be associated with the deployment orders for a breakthrough within days of consolidation before the opening of the London session.
Transparency and the characteristics of round-the-clock trading of foreign exchange market make it particularly contributes to the trade policies based on technical analysis. Technical analysis is very popular in the foreign exchange market and is used across the spectrum of participants, from hedge funds to the intra-day traders.
based on www.esignalcentral.com
