Simply put, the concept of momentum trading is that trends tend to reinforce themselves. These trends, naturally, can be either positive or negative. In the following pages, you will learn all about momentum trading and all its variations. Below are three of the main ones:
A pivot point is a technical term. In its simplest form, it refers to the average of the intraday high and low, and the last closing price available for any particular currency. Generally, if people are trading above the pivot point, you should go long, and you should go short if it’s averaging below it. Of course, it’s not necessarily so simple as all that! We will go way beyond that simple premise and show you how to figure out levels of entry, profit-taking and stops so that you can get the most out of these indicators.
A Bollinger band is a statistical term. It is used to describe an envelope that typically encompasses a standard deviation above and below the price of a currency over time. This means that the bands are not of a fixed size; they can expand and contract with changes in volatility. They can also sometimes be plotted in multiples of a standard deviation.
These bands are tools used by Forex experts all over the world. They serve to indicate probable events in the near future. We will show you all the uses Bollinger bands have, and how to learn how to read them. Also, you will learn how to use them to formulate successful Forex strategies.
MACD stands for Moving Average Convergence Divergence, which is an entirely different type of indicator. It is calculated by determining the difference between the 26-day and 12-day Exponential Moving Averages, or EMAs. Understanding and implementing the MACD is truly an art, and it’s an art you are about to learn, so get ready.
Forex scalping refers to a trade that is done for a few seconds to a few hours, generally for a few pips and using lots of leverage. It can be risky if you don’t know what you are doing. But, we are going to show you its correct implementation, and tricks to get the most out of this often-abused strategy. Ultimately, it should be another tool in the repertoire managed with the proper risk management techniques, which, of course, we will also show you presently.
Really, all the above techniques are powerful but potentially dangerous if misused. We are about to show you how to avoid any kind of pitfall. We will instead show you how to work with all types of momentum trading and other kinds of advanced Forex trading in the best way possible.