Forex Trading Strategy - the Secret of Timing

I found this article on the net, interesting and its good to discuss here...anyone using buy low sell high method here..?

Once you’ve identified a trading opportunity, the next step is to decide EXACTLY when to buy - and this is where many traders go wrong.

 

Here we explain how to incorporate better market timing into your FOREX strategy - so that you can make bigger profits.

 

Most traders time their entry levels incorrectly, so here’s the right way to do it:

 

Using Support and Resistance Correctly

 

A basic wisdom of market timing is "buy low, sell high" - well, the reality is, if you try this in FOREX trading, you’ll end up losing money. First, let’s define what support and resistance means

 

A support level is a historical price that traders come in, and buy to "support the market" – and the more times it’s tested, the more valid the support will be.

 

Conversely, a resistance level is a level on the charts that "resisted prices from moving higher"- again the more times it’s tested, the more significant it becomes.

 

Why Buy Low and Sell High doesn’t Work

 

"Buy low, sell high" is accepted wisdom by the majority of traders - but this logic is fundamentally flawed - use it in FOREX trading, and you’re asking for trouble. Why? - If you wait for a pullback, you’re going to miss some of the biggest moves.

 

Think about it - what if a currency starts to trend and doesn’t pullback? (How often have you seen this?) If you’re waiting for a pullback that never comes, you’ll never get in on the trade – and you’ll miss a major opportunity.

 

You Need to Feel Uncomfortable

 

When Trading in the FOREX market, you should usually feel uncomfortable (and that’s why most traders don’t make these trades) - as no one likes to buy or sell after the market has started trending - but doing this will make you money.

 

The fact is, the more comfortable you feel when entering a trade at support, the less likely the trade will be a big winner.

 

During any given year, most of the big moves in currencies, take place from new MARKET HIGHS with NO pullback.

 

If you base your FOREX Trading strategy around waiting for a warm comfy entry, at key support, you’re going to miss the biggest and most profitable trades – so step away from the losing majority of traders.

 

Your FOREX trading strategy should give you a different mindset - most traders "buy low and sell high" - so you should "buy high and sell higher" – i.e. you should be doing the opposite of what the crowd are doing.

 

Don’t worry - most traders lose money, and their FOREX Trading strategy is based on the flawed logic we have just discussed - so not doing what they do makes total sense. Therefore, look for breakouts through support and resistance - and sell and buy respectively.

 

Its Tough Mentally - But it Makes Money!

 

Sure, it’s hard to do - the majority don’t agree with you - and no one likes to go against the majority. However, it’s the right thing to do, to make your FOREX trading successful. Think about what we’ve just said, and you’ll see it makes logical sense.

 

Has this Happened to You?

 

How many times do traders buy into support, and the market breaks support, stops them out and continues to decline. On the other hand, another common scenario is, price never get to support - it simply goes higher - and the trader misses the chance to get in on the trend.

 

This type of trading is tough mentally - that’s why 90% of traders don’t do it - they want to be comfortable - well being comfortable is great, but you’ll lose money.

 

Breakouts work, and if you use them in your FOREX Trading strategy, you won’t be comfortable on entry - but you’ll make money - and that will more than compensate.

 

The way to succeed in FOREX trading is to do what the losing majority don’t do - then you can join the elite 10% of traders who make the big profits - try it and see

Re: Forex Trading Strategy - the Secret of Timing

Buy low sell high or buy high sell low or whatever. The real question is what is low and what is high? You really never know for sure! :(

"It isn't as important to buy as cheap as possible as it is to buy at the right time". Jesse Livermore

"Throughout all my years of investing I've found that the big move was never made in the buying or the selling. The big money was made in the waiting. " Jesse Livermore

Re: Forex Trading Strategy - the Secret of Timing

Buy low sell high or buy high sell low or whatever. The real question is what is low and what is high? You really never know for sure! :(

 

"It isn't as important to buy as cheap as possible as it is to buy at the right time". Jesse Livermore

 

"Throughout all my years of investing I've found that the big move was never made in the buying or the selling. The big money was made in the waiting. " Jesse Livermore

how traders interpret 'right time'?

IMHO, right time means get in at the same time with the big dogs, or at time before the price make big moves...one need to know the behavior of pair to do this..other opinion?

how traders interpret 'waiting"?

Is it waiting for pull back..? waiting for confirmed breakout..? or waiting for best time to enter trade..? or waiting the market to calm after big news..?

Hope the pro traders here can give some tips... :oops:

Re: Forex Trading Strategy - the Secret of Timing

I'm not a pro trader, just another dumb blond.

I'm impressed though by the saying of the author of Forex Confidante: "Market are people. A moving market means people are trading. A ranging market means people are uncertain. Predicting market movement means predicting how other people react."

Some other expert said this: "Most of my biggest profits are gained by NOT trying to understand where the price will move, but by trying to understand how people will react."

So, I think the best time to trade is when there are a lot of screaming from traders around the world. Whether s/he screams "Yahoo!" or "Argggh" The more screams, the better time to enter.

Also, if you pay attention:

- price is moving downward, bouncing a support, you buy, that means you are buying low (if, that is the low)

- price is moving downward, bouncing a support, that means it is down trend. If you buy, that means you are using a counter trend trading system.

- So, the adage "Buy Low, Sell High" means counter trend trading system

- How about the adage "Always listen to the trend" or "The trend is your friend"?

- Thus the adage "Buy Low Sell High" is VS "The trend is your friend"

Which do you choose from those 2 advices?

The article above said "Buy high, sell higher", means:

- price is moving upward, meaning up trend, we buy, meaning we are using a trending trading system

- Thus the advice to "buy high sell higher" is a trending trading system.

Regards,

Re: Forex Trading Strategy - the Secret of Timing

There isn't THE right time, it's a dream. If you know the 'right' time you know the future and sure, you'll make a lot of money...At the moment you can only try to predict it and..pray... :D

:peace:

Re: Forex Trading Strategy - the Secret of Timing

I'm not a pro trader, just another dumb blond.

 

I'm impressed though by the saying of the author of Forex Confidante: "Market are people. A moving market means people are trading. A ranging market means people are uncertain. Predicting market movement means predicting how other people react."

 

Some other expert said this: "Most of my biggest profits are gained by NOT trying to understand where the price will move, but by trying to understand how people will react."

 

So, I think the best time to trade is when there are a lot of screaming from traders around the world. Whether s/he screams "Yahoo!" or "Argggh" The more screams, the better time to enter.

 

Also, if you pay attention:

- price is moving downward, bouncing a support, you buy, that means you are buying low (if, that is the low)

- price is moving downward, bouncing a support, that means it is down trend. If you buy, that means you are using a counter trend trading system.

- So, the adage "Buy Low, Sell High" means counter trend trading system

- How about the adage "Always listen to the trend" or "The trend is your friend"?

- Thus the adage "Buy Low Sell High" is VS "The trend is your friend"

 

Which do you choose from those 2 advices?

 

The article above said "Buy high, sell higher", means:

- price is moving upward, meaning up trend, we buy, meaning we are using a trending trading system

- Thus the advice to "buy high sell higher" is a trending trading system.

 

Regards,

Hi William,

I like ur explanation on buylow sellhigh and buyhigh sellhigher...counter trend and trend trading..no one can predict exactly whether price will bounce or breaks at critical levels support or resistence..

how low is low, how high is high always a question mark...but we know that price moves according to historical pattern (fractal geometry)...so, i think price history is important in trading analysis...

explanation by Bill William in his book Trading Chaos II about the market is similar with the author of Forex Confidante, market is a creature of chaos...and market is what you think it is....so, try to dance with the market... :mrgreen:

Re: Forex Trading Strategy - the Secret of Timing

Buy low sell high or buy high sell low or whatever. The real question is what is low and what is high? You really never know for sure! :(

 

"It isn't as important to buy as cheap as possible as it is to buy at the right time". Jesse Livermore

 

"Throughout all my years of investing I've found that the big move was never made in the buying or the selling. The big money was made in the waiting. " Jesse Livermore

 

how traders interpret 'right time'?

 

IMHO, right time means get in at the same time with the big dogs, or at time before the price make big moves...one need to know the behavior of pair to do this..other opinion?

 

how traders interpret 'waiting"?

 

Is it waiting for pull back..? waiting for confirmed breakout..? or waiting for best time to enter trade..? or waiting the market to calm after big news..?

 

Hope the pro traders here can give some tips... :oops:

I am very sorry because I am not a pro trader. :D Dancing with the market as you said is what it is all about..

Some people would try to predict what would be the price in the future in other words trading based on what future will hold! They think that they need to know that in advance if they want to succeed in trading. They always talk about accuracy of a system because they are afraid of losses. They want to be right most of the time and they want to figure out such a system once and for all that does the rest for them so they could rest and enjoy themselves happily ever after.

Trading is not an an exact science but more kind of an art which will be gained through hard work, patience and your individual experience. Your trading style shoud suit you and your bankroll as well. You need to figure this out for yourself before start trading and this should be reflected in writing in your trading plan.

See what the market is doing at the time, if you see its going up buy if you see its going down sell. You may me right and you may be wrong but who cares because you only risk a tiny amount of your capital. You will have many losing trades and hopefully a very few winning trades along the way but because your losses are tiny compare to your profits which is huge you will come out profitable at the end of the day. The money is made in the big moves so you will try to catch a big move. If the market is flat or going nowhere you sit aside and wait, go on holidays and enjoy yourself or, if you cannot wait this and want to trade anyway then you go and search elsewhere for a trending market. Along the way you sometimes may get lucky but if not you will not be pushed out of the game because you were patient and only risked a tiny percentage of your account and, hopefully the next time coming the luck will find you again if you only have the patience to wait for it not blowing your account. You take what the market gives you and you say thank you and never try to revenge whatever! To do all that of course you will need to be disciplined which it boils down to individual psychology. Lack of discipline or patience is what fails most people!

:peace:

Re: Forex Trading Strategy - the Secret of Timing

I am very sorry because I am not a pro trader. :D Dancing with the market as you said is what it is all about..

 

Some people would try to predict what would be the price in the future in other words trading based on what future will hold! They think that they need to know that in advance if they want to succeed in trading. They always talk about accuracy of a system because they are afraid of losses. They want to be right most of the time and they want to figure out such a system once and for all that does the rest for them so they could rest and enjoy themselves happily ever after.

 

Trading is not an an exact science but more kind of an art which will be gained through hard work, patience and your individual experience. Your trading style shoud suit you and your bankroll as well. You need to figure this out for yourself before start trading and this should be reflected in writing in your trading plan.

 

See what the market is doing at the time, if you see its going up buy if you see its going down sell. You may me right and you may be wrong but who cares because you only risk a tiny amount of your capital. You will have many losing trades and hopefully a very few winning trades along the way but because your losses are tiny compare to your profits which is huge you will come out profitable at the end of the day. The money is made in the big moves so you will try to catch a big move. If the market is flat or going nowhere you sit aside and wait, go on holidays and enjoy yourself or, if you cannot wait this and want to trade anyway then you go and search elsewhere for a trending market. Along the way you sometimes may get lucky but if not you will not be pushed out of the game because you were patient and only risked a tiny percentage of your account and, hopefully the next time coming the luck will find you again if you only have the patience to wait for it not blowing your account. You take what the market gives you and you say thank you and never try to revenge whatever! To do all that of course you will need to be disciplined which it boils down to individual psychology. Lack of discipline or patience is what fails most people!

 

:peace:

well said K12... :shand: :arrow: :arrow:

Ah timing. Thats the key.

Have a look at jenkins secret angle method. You'll get the timing right on :)

"A support level is a historical price that traders come in, and buy to "support the market" – and the more times it’s tested, the more valid the support will be.

Conversely, a resistance level is a level on the charts that "resisted prices from moving higher"- again the more times it’s tested, the more significant it becomes."

**

Supposed trading axioms like the two above do not hold any water when one actually begins to look into what is actually being said.

Here is the actual fact: The more times an area of support or resistance is tested the LESS significant it becomes and the more likely

it is to be broken. Markets are the arena within which the Law of Supply and Demand operate. A support level is formed when Demand

finds a price level where it overtakes the current amount of Supply. Every time a support level is retested, the Demand that existed at

that level is getting closer and closer to being exhausted. Every single retest of an area of support or resistance only serves to weaken

the forces of Demand or Supply that once existed at that level that originally caused it to become support or resistance. This causes

that price level to become LESS significant and much more prone to being violated.

Don't try to predict. Just want what the Market wants. React to and Align yourself to what the market is actually doing. Ignore the rest.

Well said Diesel

if you try and predict then you must be able read the minds of all the major players who manipulate the market to their advantage

As it was said by Diesel follow and react to moves that are been created by these price changing experts, if you do this you will have more chances of succeeding than loosing.

Sell at the openings of market and Buy at the end of the day or during luncheon break. Buy pullbacks no breakouts! If stocks, buy at end of the months, especially if dropped 1-2 days in row.

Hermes