As most investor and traders who trades in the foreign exchange market concentrates mostly on the economic numbers and reports that affects the price behavior and directions of the major pairs. It is very important that chart comparisons be made between other currencies versus the cross rates because they leave a very good impression as to where the market direction is headed. Although, to find which amongst the long list of major currencies traded will match how they perform. Here is a good example of being able to choose which may work in the forex market. However, it does not necessary mean that it will work all the time. The volumes and the number of participants do have an influence as to momentum increase of decline in prices.
A four (4) hourly chart on the British Pound ( GBP / USD ) versus the Euro / Pound ( EUR / GBP ) may prove to be surprisingly close in the sense that one mirrors the other. Pay close attention to the time separators in between trading sessions. As you may be able to see the direction of the market opposite to each other. Also be aware that each currency pair does not have the same value, trading range and net change in any one particular point of time. Although, the investor needs to allocate the closest no. of contracts or amount to be invested to have either a relative close hedge position without over-exposing the leverage being used in the market.
As the prices move, the net effect on both positions in terms of dollar amount on the account can be managed because the other position serves as a cushion for negative effects in the price change. This strategy can maximize the full potential of the market direction to the clients' objective. Without being greedy, this can easily build up equity over the principal amount invested in the market. The trader just needs to be able to improve the timing of having a plan of action for existing the positions. The probability of knowing the market direction can be determined from the persistent bias of the market. Some would cut the wrong position and leave the right one longer in the market and vise versa.
This strategy is very effective for medium term traders who effectively use percentage trading as against short speculative positions like scalping or simply day trading. As clearer example can be found in the website: http://megatrade101.com There on the top menu, click on the Market View and you maybe surprised as to how this strategy works. There is no holy grail in this volatile market. However, with a well developed plan of action it can be done with proper execution. Remember that there are risks involved trading the foreign exchange market. Either a substantial amount can be lost while trading this market. So consider your financial condition whenever you decide to get involved in forex market.
Good Luck and Happy Trading!
A four (4) hourly chart on the British Pound ( GBP / USD ) versus the Euro / Pound ( EUR / GBP ) may prove to be surprisingly close in the sense that one mirrors the other. Pay close attention to the time separators in between trading sessions. As you may be able to see the direction of the market opposite to each other. Also be aware that each currency pair does not have the same value, trading range and net change in any one particular point of time. Although, the investor needs to allocate the closest no. of contracts or amount to be invested to have either a relative close hedge position without over-exposing the leverage being used in the market.
As the prices move, the net effect on both positions in terms of dollar amount on the account can be managed because the other position serves as a cushion for negative effects in the price change. This strategy can maximize the full potential of the market direction to the clients' objective. Without being greedy, this can easily build up equity over the principal amount invested in the market. The trader just needs to be able to improve the timing of having a plan of action for existing the positions. The probability of knowing the market direction can be determined from the persistent bias of the market. Some would cut the wrong position and leave the right one longer in the market and vise versa.
This strategy is very effective for medium term traders who effectively use percentage trading as against short speculative positions like scalping or simply day trading. As clearer example can be found in the website: http://megatrade101.com There on the top menu, click on the Market View and you maybe surprised as to how this strategy works. There is no holy grail in this volatile market. However, with a well developed plan of action it can be done with proper execution. Remember that there are risks involved trading the foreign exchange market. Either a substantial amount can be lost while trading this market. So consider your financial condition whenever you decide to get involved in forex market.
Good Luck and Happy Trading!
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