The currency pairs which make up the foreign exchange market provide us with some of the most reliable trading trends. This is due to the high daily liquidity, or volume, of the market. The foreign exchange (forex) market as a whole trades around US$4 trillion every day – far more than all of the major stock markets in the world combined. All of this trading creates strong trends!
For instance, let?s look at the EUR/USD currency pair. Of all of the currency pairs that make up the forex market, none is traded as heavily as this one. This means that whatever direction this currency pair is moving in, there is a huge amount of money backing it. It is believed that there is nearly US$1 trillion of trading volume per day on this currency alone. If it is trending up, it will require something dramatic to sufficiently turn the sentiment of the buyers into sellers and shift the trend.
Compare that to an obscure stock listed on a minor stock exchange. The smallest bit of news regarding the company, or the change of opinion by just a handful of stock holders, can turn an uptrend into a downtrend very quickly.
Liquidity is the key in providing reliability for trend trading – this is good news for the forex trend trader.
In 4 Keys to Profitable Forex Trend Trading, technical analyst Christopher Weaver covers four different approaches to trend trade the foreign exchange market. These four keys are – trend lines, channels, fibonacci retracements and symmetrical triangles. Weaver explores the primary strength of each key, why it is useful, and the different variations. He then goes on to explain two practical strategies for each key and how to use them to execute successful trades.
It is worth noting that all of the strategies in this book can be described as continuation strategies. A continuation strategy is one that is traded in the direction of the trend on the assumption that the trend will continue.
As these keys are general concepts in technical analysis they are not limited to specific currency pairs. For example, one can trade using a trend line for a minor cross currency pair such as the GBP/AUD, with the same confidence as when trading a major currency pair such as the EUR/USD.
These keys and their corresponding strategies are designed to be traded in the foreign exchange spot market. But they are equally applicable to trading CFDs or spread betting.
As this book does not cover such basics as general trading terminology, the process of placing a trade or navigating through a trading software package, it is assumed the reader is comfortable with trading in general and is therefore looking to enhance their overall trading experience by generating more profit. The application of the techniques in this book should be possible with any standard charting package. If you are a complete beginner and have never traded forex before, you will probably need to read an introduction to the market somewhere else. Ultimately, this book is for people who want to know how to trade with the trend and who want to consistently make money.
In all, 4 Keys to Profitable Forex Trend Trading is an excellent guide for experienced traders and investors who are keen to master the complex forex market. The concepts behind the 4 keys can sound mysterious, but Christopher lays bare their workings with plain English and sharp insight. Fully illustrated with charts and examples, this is a unique and essential guide to making successful trades in the most exciting market out there. Recommended for anyone who is interested in making money from trading on a long-term basis.
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