Forex Education - Get Huge Profits With This Simple Strategy

By: Kelly Price

In recent articles I have been giving some trading ideas and postulated the euro would top at 1.50 and would hit 1.44 and it did making a big profit. Yesterday we looked at the yen and said it would strengthen and its up 50 ticks at time of writing - Here I will explain some simple knowledge that anyone can use to target big gains.

The basic logic is simply to use the long term fundamentals measure the bullish or bearishness of a market and then when it's at an extreme use technical levels to execute trading signals.

I have been a trader for 25 years and had the confidence to do the euro trade live and will review that and another big trading opportunity.

Keep in mind this equation its how and why markets move:

Fundamentals + investor perception = market price

We all have the same facts to look at but you me and millions of other traders draw our own conclusions and that's the price.

It's a fact that humans are governed by greed and fear and push prices to far away from fair value.

Prices then they return when traders realize what they have done.

In the euro for example at the peak the traders had simply pushed prices too far and the consensus believed the following:

-US Interest rates could decline by 1%.

-The US economy could slide into recession.


-Oil would trade over $100 and barrel and stay there.

-The credit crunch was a US not an international affair.

The facts of course did not support such a bearish view and rates are now perceived as not falling further, GDP and jobs data supports the view that the US economy is on the mend, the credit crunch hurts everyone not just the US and finally oil never stood a hope of trading at 100 or more as demand is falling and next year it will trade in the 80 - 90 region.

So when we saw this and newswires Giselle the super model was insisting she be paid in any currency than dollars, you know the dollar had been pushed to far!

So we waited for a reversal day the euro touched 1.50 settled near its lows and sold off 6 full points.

So you look for markets that have simply gone too far and buy or sell the other way timing your entry with technical indicators

Another trend that has gone to far now is the dollar against the yen it's in a downtrend and is trading near the key 114.00 level. The market is over bought in the short term and due a fall. So we have checked momentum into the level and sold.

If were wrong the risk is low and we would simply buy the breakout about 114.00 which if broken on a close basis would indicate further strength.

Trading is not about being right but picking high odds trades and going with the market action wherever it tells you.

Many forex traders buy mechanical systems that are simply a sequence of numbers and they have no confidence in it when it hits a drawdown period.

This method on the other hand is easy to understand and you can use it to great advantage and make huge profits as my live illustration showed.

Could you have made 600 pips with the above info?

Of course you could and you will spot many more scenarios and can use simple support and resistance and some momentum indicators to time your move.

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