British Pound - our View Was Right a Profit and a Forex Lesson

By: Kelly Price

We have been looking at the British Pound from the short side and entered and now were in profit. We showed this trade step by step in previous articles.

If you want to learn how to trade forex markets correctly read on.

This article was writeen at 9.30 PM CET.

Now of course we look good as the trade came off - but were not going to tell you we have found the secret of trading or anything like that, we simply trade the odds and we get more right than we do wrong.

The British Pound is Bullish

However it got to bullish, as speculators have piled into it with greed driving them.

A quick look at the CFTC Net Traders Positions shows speculator pound positions at record long and polls showing over 80% of participants bullish - this made it ripe for a correction and then it was a question of timing entry.

You Must Do This To Win!

You can't predict where any currency is going so don't try.

This is an important lesson traders never learn they buy or sell and hope the level holds and lose.

If you learn one thing about trading FX It's - always trade with momentum and that's what were going to look at now.

Pull up a good free chart service like futuresource.com - add the indicators Relative Strength Index and stochastic.

Notice how RSI has double topped and is at bullish extreme - this shows waning of momentum but was not the signal to go short - that followed from the stochastic:

Notice how both lines crossed with bearish divergence that's was the trigger for us to execute our trading signal.

Your now trading with the odds and have a profit and there looks to be more on the way.

Want a target?

Add the Bollinger band and check the mid band - that's the longer term moving average and prices will target this initially, although a test of the bottom band will follow if this level gives way.

Do we think prices will continue to fall?

The answer is we don't know but we do know the odds favour the bears.

With so many specs holding longs who bought on greed, fear will now grip them and they will exit their positions, some are starting now and others will follow and the selling should continue.

This was a great high odds set up, it worked and if you followed the previous articles you will have seen it unfold.

Remember this:

We could have been wrong but this was low risk high reward trade and that's what you need when you trade currencies.

Try trading with momentum and see how it can work for you.

All the information is available in our other articles and the tools are free on the net.

Learn This Method FREE!

One final bit of advice you will see lots of e-books showing you how to predict markets - ignore them you can't.

Have you ever seen one of these e-book sellers have the guts to test their predictive methods in real time like we have just done? Of course not and you know the reason why - prediction doesn't work.

Save your money get your own system for free and trade the odds for currency trading success.

Good luck!


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