Recently I wrote some articles and outlined 2 x trades using both fundamentals and technical inputs combined. The trades made nearly 1,000 pips and you can look them up and see. Most traders think you can't use both - but you can. Here I will show you how to do it and target triple digit gains.
Let's first look at a simple equation for forex price movement.
Supply and Demand Facts + Investor Perception of = Price
Traders Make a Price
So it's not the facts that are important by themselves, it's all the investors trading opinions of them combined that gives us the final price
Now it's a fact that markets do move to the long term fundamentals - but the traders make their trades based upon their knowledge and their emotions. They will as always, push prices away from fair value and the long term fundamentals.
A look at any forex chart will show you that these spikes always end and prices come back to fair value.
Seeing the News in a Different Way to the Majority
So how do we get advance warning that prices have been pushed to far?
Not by a chart - that just tells you what is happening not what may happen. To get clues to the future you need to look at the market sentiment and try and judge if prices have been pushed to far or not.
Many traders try and trade the news and the opinions of so called experts - but this is a waste of time. These are just opinions and reflect the crowd psychology.
What you want to look for is - when the price is out of step with the fundamentals and greed and fear have taken hold and this is easy to spot:
- Watch for a general view there is no top or bottom in sight
- Watch for news that should be bullish or bearish which fails to move the market the way it should. If bullish news fails to rally a market for example this is telling you what may happen next
- Check a key technical level and use your forex charts to key off it and do the opposite of the majority
Judge Sentiment and Win Big
Sentiment is the key to where markets go and you don't look at the news from the perspective of what is said - but how price reacts to it.
You are looking for the Opposite of everyone else.
It's then time to time your entry with technical tools and use support and resistance to key off.
Prices don't move to fundamentals so you shouldn't use it on its own. Prices also don't move to some hocus pocus repetitive scientific number sequence either. Forex markets are an odds game and you need to judge sentiment to win.
You can only do this by combining both disciplines and if you don't believe it works - check out my 2 recent articles which made nearly 1,000 pips in less than two weeks.
If you use fundamentals and technical and learn to use them the right way you can make huge gains.
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