Saturday, October 9, 2010

News & Fractals.




For years I've heard various educators talking about "1-2-3" or "A-B-C" moves, especially around FOMC announcements. Now that I'm on my way to consistent results as a result of simplifying and relying on the law of big numbers, I've finally begun to be able to use this concept in my own trading.

It's usually the third wave out of news that brings home the bacon. That three-wave process then gets repeated on larger timeframes (shown in the charts). Assuming news brings volatility, which it almost always does (FOMC always does...)you can use this basic idea in conjunction with whatever you currently do to position yourself after the initial stops are taken out on either side of the potential trade.

Using strict risk management (ie simultaneous stop & order placement!)around these events can allow for a larger R:R ratio.

3 comments:

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Aly chasan said...

Forex trading is a very sensitive area that heavily influenced by the global economy, so it's very important to follow economic FX News, learn Forex, and of course practice with demo accounts - all these will help ensure success in trade.