Forex Trading Strategies 9

Currency Trading Strategy Number 46:
May 23 was supposed to be an M2/M4 day, given the up-close for
the last session. But, the actual range came in at Pivot Point/R2.
Trading is "shades of gray" ladies and gentleman. Pivot points are
not cast in stone. But, they are usually pretty close.
That day, the combination of Pivot Point and R2 achieved better than
the average daily range for the Euro, well within the confines of logic
behind my pivot point definitions. The central Pivot Point becomes a
buy point (read, support), when it is breached to the upside
convincingly, and so it became a reasonable starting point for price
to commence its "range-finding mission" for the session. Likewise,
R2 is a sell point (read, resistance), and so it was a viable target for
selling pressure, as the Euro exhausted its "search" for the end of its
range for the session.
The main point in all of this is that the full range for the Euro was
achieved within the parameters of the pivot point logic and rules,
which is the most important point to get out of all of this. By that I
mean that the four pivot points below the middle pivot point are all
"buy" candidates, and the four pivot points above the middle pivot
point (including R2) are all "sell" possibilities. Achieving the full
range, or more than that as was the case May 23, is what it's all
about, more so than strictly adhering to the M1/M3 or M2/M4
windows of "buying" and "selling" opportunity.
I hope you are beginning to see the power of pivot points in action.
You only buy and sell in and around them – not in between, which is
what we call "NO MAN'S LAND." Not the place to enter trades. The
only caveat here is where price forms patterns like we saw that day
above R2 with the double-top/railway tracks combination. Such a
reversal phenomenon, especially with two distinct formations
occurring at the same time, cannot be ignored.
But, what is significant here is the fact that this "double whammy"
took place after price had penetrated R2 to the upside, which to me
looked like an exhaustion area – considering the fact that the last
point of resistance had been broken. Then, you look for convincing
evidence that price is going to continue its trek north, or do a u-e, as
it did in this case, and head south.
There are important lessons to be learned in all of the charts I post
at this site. So, please study them carefully. There are parallels, as I
am sure you can see, between one session’s price action and that of
the previous one. In fact, given the nature of currencies trending
well, every day pretty much looks the same, except for different
actual ranges and different low and high points (read, iterations of
the nine possible pivot point lows and highs).
Price will always determine which set of pivot points it is going to
work with, and that is why you always follow price's lead. That's also
why I call price the "fifth indicator," and perhaps the most important
one of the five I work with. By now, you will have learned more
about the other four indicators, as you studied the previous currency
trading strategy tips.
Please study the charts I post at this site on a daily basis, as they
offer important clues that occur each and every day! If you
understand what you see in those charts, you can't help but prosper
with your trading on a consistent basis.

Currency Trading Strategy Number 47:
Don’t be greedy. I heard it said recently by one of my clients that he
walked away from a session with only 150 pips in his pocket, and left
a lot on the table. Boy, for somebody coming from the stock world,
as he did, he should been thankful for his catch of the day. The point
is, if you start out as a newbie looking to carve out only 20 pips per
session, then anything beyond that is gravy, and it will surely come
over time.
But, don’t forget the old adage, “Nobody can argue over profits in
the bank.” If you see a profit, and want to take it, then do so, and be
happy. You’ll live to see another day, and take some more profits.
Just don’t always grab for the brass ring. This isn't about always
hitting home runs. This is about having staying power, and taking
one base at a time. When you have good reason to exit a trade,
make your move, and be done with it.

Currency Trading Strategy Number 48:
Former Cleveland Brown's coach, the legendary Paul Brown, taught
his football players a systematical/methodical procedure of
understanding tasks to attain successful results in face of
unforeseen, variable difficulties.
So too with foreign exchange trading. Forex trading requires
adherence to a set of currency trading strategy rules, which I have
set out at this site.
A wide body of research in behavioral finance shows that traders
consider the loss of $1 twice as painful as the pleasure received from
a gain of $1. That's why they take more risks to avoid losses than to
realize gains. They end up buying high and selling low, contrary to
conventional wisdom. Follow my currency trading strategy rules, and
you'll avoid getting a closely cropped haircut when the forex tanks on
you, as it did May 28.