How to Catch Forex Profitable Trends – Momentum Trend Channel Trading Strategy is mainly a trend following system designed for trading forex market. It’s based in volume, momentum, and trend channel (i-regression curve) stochastics candles.
Trend Channel indicator : is simply a visual trend identifier ( yellow line ). It provides visual confirmation for the rest of indicators used to identify the major trend. It doesn’t provide buy/sell signals but it provides overbought and oversold areas – between red lines.
Momentum Indicator : One of the key tenets of technical analysis is that price frequently lies, but momentum generally speaks the truth. Just as professional poker players play the player and not the cards, professional traders trade momentum rather than price.
From signalling the trend to setting the price, momentum and volume is the best friend and forex traders can strive to have in the market place. So let’s understand a little more and see whether you can use this tool in furthering your currency trade and getting the maximum return on your investment, or not.
- Blue stoch Candles;
- Bufu trend signals = Blue Bars;
- Trend Channel = Up Trend;
- Blue Arrow = Entry Signal.
- Momentum upward above 100,08 line
- BetterVolume bars above above MA line
- Red stoch Candles;
- Bufu trend signals = Red Bars;
- Trend Channel = Down Trend;
- Red Arrow = Entry Signal.
- Momentum downward below 99,92 line
- BetterVolume bars above above MA line
Demo trading is like the gateway to a great forex career. Here you can test how well your predictions work, you can improve your strategies without risking anything in the market, and you can refine and improve the emotional side of your psyche to better suit the market itself.
Just make sure that you also test your results in demo trading with a period of real trading with a demo account. Real trading is of course an altogether different task from demo trading, but your chances of succeeding in the former are a lot greater if you can do well in the latter.
Volume is a popular tool among traders, but most look at volume over time. When you plot volume against price scale, then a completely different picture emerges. There are prices that have a large amount of volume and prices that have much less volume.
Volume Price Level Trading is not new, in fact it is as old as futures trading or even the stock market itself, long before computers existed and the only ticker..well…was a ticker tape of price and volume. Many argue in Forex that volume is a meaningless indicator because it only indicates a broker’s volume.
There are two problems with that argument. The first is that why indicators even work, is that they extrapolate historic price data and then traders use this information to make trades which affect price action. Second, volume is not an indicator.
Volume typically leads price and is the only tool that doesn’t extrapolate historical numbers (i.e. what the market did) to determiene a result. Volume is price action. The effect on price is that high volume tends to be attracted or work within a price range around a price level. High volume is high market interest in a price level, low volume is low market interest in a price level.
The market mans that for every buyer there is a seller. Forex is not random price moves. Price moves because someone is selling and someone is buying at a price. The more popular a price for buyers and sellers, the more volume.
Volume in Forex is a broker’s tick volume data from it’s own database. This means that volume is a record of every trade, 1 trade, 1 volume. Volume is not the quantity traded. The reality of Forex is that everyone sees the same price, everyone uses the same indicators and why volume works across brokers is that the market makes the same decisions, regardless of which broker they use.
The end result, is that at each price level the volume increase or decrease is relatively the same at any broker because the market interest is the same at each price level. This has been proven time and time again, by traders using multiple brokers, comparing brokers, by using multiple broker feeds, and so on. Volumes will not be exactly the same, but their relative movement to price will be the same.
A price level is like a magnet, price candles are iron bars attracted to the magnet, and volume is the magnet’s strength. The stronger the price level, the more attracted price is to it. Price will bounce around a strong price level and be difficult to move off the price level. Try to move an iron bar that is attached to a magnet…very hard to move, but once the iron bar moves away from the magnet, it is a lot easier to move.
When a price level is weak, there is nothing to hold price at a fixed level and prices can move more aggressively and quicker. Iron bars will easily pass by weak magnets, but when they hit a strong magnet they will stick.
Trades in the market are largely pre-determined. There is a price level where buyers and sellers will gather. This means that if you watch price and volume, you are not looking at what has happend in the past, you are looking at where the market is headed. Once you find a strong price level, you can trade to and from that price level knowing that price will be attracted back to that price level.
Volume Price Level trading is not a system in a traditional sense. It is reading the markets. However, many moves with price/volume are repetitive and predicatable. What can never be forgotton is that we trade price levels, we are looking to where price is most attracted too.