Need Profits ?? Just Go To Trading Forex

You will find that quite often a currency pair will trade within a tight range. When doing so, price will repeatedly bounced between a resistance (upper level) and a support (lower level). If you can confirm such trading patterns then you should realize that they are excellent trading opportunities that can be very lucrative over an extended period of time.


Basically, you require a technique that will enable you to detect when price is about to change direction. As identifying exact tops and bottoms is quite a difficult task, many experts prefer setting entry points for new trading opportunities based on price declaring its intentions to reverse. Should price then comply with your expectations, you can then trade the currency pair to the other side of its range.

For instance, the Relative Strength Index (RSI) is frequently used to range trade. This is because this technical indicator advises that a currency pair is overbought when it registers a reading of 70 or higher. Similarly, you should consider price is oversold if you witness readings of 30 and below.

Consequently, when you are range trading, you should consider going long if you can confirm that the RSI has dropped below 30, created a bottom and then bounced back upwards above 30. Similarly, you should open a short position if you observe the RSI climbing above 70, topping and then reversing back below 70. You must exit your trade when price touches the opposite condition or you identify the next RSI crossover.
In addition, when you open a new trading position, you should set your stop about 20 pips below the lowest point recorded if going long and 20 pips above the highest point when opening a short position. You should then place your target at the resistance level if long and at support if short.

When range-trading, you are strongly advised to use the longer time frames on your trading charts from the daily and upwards. This is because your charts will display support and resistances that are much more reliable and not prone to Forex noise. Consequently, you will experience more success if you do so because your positions will then be dominant by real price action.

If you attempt this type of trading, then you must adhere to the recommendations of your trading strategy and only open and close your positions when if advises you to do so.

You must certainly control your emotions during this process. For instance, should price start to advance rapidly towards your stop position then you must not allow fear to make you interfere with your stop positions and move them further away from your open positions. This would be a very dangerous practice to utilize which could produce substantial losses over the long haul.

Similarly, you must not let greed make you adjust your targets at the first sight of increased profits. Always remember that Forex is capable of generating significant levels of volatility that can wipe out your profits in a very short space of time. Instead, just follow your trading strategy precisely and do not fall foul of your emotions.

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