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Trading Strategy

How Golden Cross Trading Strategy

Golden Cross Trading StrategyThe basis of most trading patterns and strategy is formed from support and resistance levels. It is not just in the forex market that these levels become apparent but in nearly all markets that have any degree of fluctuation in their value. In this article I am going to explain what support and resistance levels are and how we use them as a golden cross trading strategy.

Golden Cross Trading Strategy

Support and resistance levels are best described as levels in which a price is having difficulty breaking through. In a buy situation the price may move up to a level then drop back down a few pips then move back up to the same level several times. This level will become resistance, in the opposite direction, a sell situation the price in which the currency is having difficulty succumbing is known as the support level.

It is the breakthrough of these levels that become signals for traders to enter a golden cross trading strategy as a continuation of the trend is usually imminent and a new support or resistance level will be formed at the next technical level. The use of support and resistance levels does not just indicate to a trader when to enter a trade but also where to exit a trade or even where to place their stop loss.

Forex Trading Strategy

It is common for the breakthrough of these levels to then have the reverse effect; support becomes resistance and resistance then becomes support. To use and actual example of this I am going to set a scenario; the GBP/USD has reached a resistance level at 19000 it has been banging up against this level for a couple of hours so you set an entry point to buy the GBP/USD at 19011. The price is finally broken and shoots up to around 19050 as the price starts to lose momentum you move your stop loss up to just below 19000. The strategy is that the once resistance level of 19000 will now become support for the continued buy trend.

Support and Resistance

This basic method of trading golden cross trading strategy is used all the time in conjunction with other strategy for entering and exiting trades. You can see when you manipulate you charts to different time frames that these support and resistance levels are continually repeated when the currency is around the same price. You will also notice that round number such as 19000, 18000, 17000 e.t.c. nearly always offer support and resistance. These numbers are also called psychological numbers because the effect they have on traders buying and selling at these points.…

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Trading Strategy

Bollinger Band Trading Strategy

Bollinger Band Trading StrategyBollinger band trading strategy can be used by traders for a number of purposes and that is part of their appeal. Novice traders can use them for simple trading methods or expert traders can take advantage of the data they provide to perform more complicated analysis on the market. One of the best uses of the bands is predicting price breakouts. With the correct analysis the Bollinger band breakouts can be incredibly useful to traders because they can indicate that entering the market could be a bad idea if the direction of the breakout is unknown. On the other hand it would be wise to play the market if the direction of the breakout is made clear.

Advanced Bollinger Band Trading Strategy

It is generally conceived that securities usually trade within a range for the majority of the time. Bollinger bands are one of the best indicators at demonstrating this because often the price of a security will rebound off the upper and lower band over extended periods and this is considered to be trading within a range. However there are occasions when the range is broken and often when it is it can create a drastic change in price and market direction. This is known as a price breakout and being able to accurately predict this breakout is essential for any trader hoping to make significant money. They can combine the trade ranging analysis with price breakout analysis to signify that a breakout is likely to happen and this information is invaluable to any trader.

Bollinger bands

There are a number of characteristics which must be present in order to accurately analyze a potential price breakout whilst using Bollinger bands. Firstly the volatility of a security should be very low. This is indicated by the space between the upper and lower bands being very narrow. Once these two bands are very constricted they should ideally both be heading in a horizontal direction. When the bollinger band trading strategy behave like this it suggests that a price breakout is imminent and the market is very likely to move far out of the current trend. In this situation a trader can either decide to leave the market because they are unsure of the direction of the price breakout or they can try and play the market to potentially make plenty of profit.

Method of Playing the Market

A basic method of playing the market in this situation is to place a pending buy and sell either side of the current price. This ensures that no matter which way the breakout occurs a position in the market will be triggered but this could be subject to a fake movement whereby the market initially moves in one direction and then changes to its true course.

Another way of predicting the direction of the breakout is by using other indicators in conjunction with the bollinger band trading strategy. This is often a more reliable route and can help a trader feel more confident when making a move in the market because the evidence is more substantial.…