Market Timing resolves Trading Difficulty

The degree of trading difficulty for the Foreign Exchange Market for the past few weeks have been gradually increasing together with the kind of volatility we can see on the price action alone. From a thinly traded market during short holiday trading from the fourth of July weekend have been at a steadier pace of volume increases and momentum build-up / declines as prices narrowly gain and looses its gains, as it quickly did within two to three day spreads. With other traders / analyst caught in between the haggling reports from the rippling contagion crisis in Europe, causing the prices relatively to move in both directions on a day to day basis. Although, the trend still remains intact during the end of the trading week, where the trend is still well identified for the European currency pairs including the cross rates. And with minor corrective movements as we go along the way.

With this week's thin market reports on both sides of the continent; the obvious market sentiments from the previous trading weeks would be the same, until any real serious fundamental would point otherwise. With price action within a wider trading range; the degree of having a successful trade would depend on a properly executed market timing on entry and exit strategies. However, the risk tolerance should be well defined in advance, as this market would not be suitable for short term trades that barely have enough for a negative tolerance while maintaining the respective positions. As wide price fluctuations can easily trigger a stop on both sides of the trade. This also goes the same way with having an appropriate amount of funds to risk for a wide and volatile market. If not, please do not even bother to consider any risk in exchange for the thrill of winning big, which may eventually turn in to a total loss of trading capital.

However, the relative trading analysis of timing the market weighs more in any successful trade. A trade decision to go long or short for a certain period of time needs to be well defined. Using the shorter time frames for entry and exit strategies would be appropriate. And segregating the charts into a daily, weekly & monthly basis should be able to determine the overall position and not the other way around. As everyone knows that each and every technical tool being used in most trading platforms are lagging indicators that portrays the action after the fact. Staying ahead of a lagging indicator would surely improve the winning ratio in every trade.

Knowing how to calculate these indicators forward/backwards outside of the embedded chart indicators; the likes of the simplest and commonly used trading tool like the Relative Strength Index (RSI), Moving Average Convergence /Divergence and George Lane's Stochastics would be very useful to know. This certainly would be a way of staying ahead of the competition; so to speak with other market participants when trading actively in the market place. By the time most traders would be coming in the market from their confirmation, you would then be coming out of the market ahead of the pack.

Although, the orientation of each trader and investor differs from one another. And knowing where one's comfort level of risk appetite and tolerance can only be enhanced by improving one's skills in trading by due diligence studies and obtaining the right information from reliable resources.