Would you like to have more control over what happens when you trade Forex? Trading during the Dow Open or the beginning of the New York Stock Exchange is one of the best ways to do this. Why does this offer a trader the upper hand? Because it puts them in the same position every day, allowing them to read the markets ahead of time and predict which way the market will open, moving a specific currency pair.
The EUR/USD is my favorite currency pair to trade in the open. When it comes to the direction of the equity markets, this pair is extremely predictable. Trading the equities markets is all about value and risk, and if a currency trader understands a few concepts, they may learn to trade at this time and make pips quickly.
The majority of traders have trouble deciding when to enter a trade. They next turn their attention to technical analysis, yet technical analysis does not prepare traders to spot market momentum. The fuel that propels a trade in the intended direction is momentum. Without it, many trades sit in one spot, moving a few pips back and forth, or the trade backs up, causing a larger-than-desired drawdown or taking out a stop.
Anyone who has traded in the currency markets for any length of time understands that market makers can cause trades to be lost. Trading during periods of high momentum is one approach to avoid this. The Dow trade is one that allows a trader to trade with momentum almost 100% of the time and at a specific period during the day.
In addition, by trading at this time the trader can learn certain cues that will tell him which way the market opening will affect the direction of the EUR/USD. When the trader has this information and is ready to trade then he or she can look for the proper technical signal by which to enter. One particular good signal is what is called an RSI Reversal which consists of two kinds of momentum signals; RSI Positive Reversals and RSI Negative Reversals.
Many traders who day trade trade using RSI, the Relative Strength Index. One of the common mistakes however, is thinking that because the RSI gets to 70 it means sell and if it gets to 30 it means buy. This is not the case. When trading learn to locate momentum in the market and then the signal. You will be glad you did.
Resources:
Identifying trends
Trading rock
Good investors
Big mistakes in trading
Guide for newbies
Brief guide
3 steps guide
For beginners
Trade online
More trading
Good trade
Technical analysis
