Forex Tactics! Never keep a closed mind when it comes to Forex trading. That is a pearl of wisdom that can increase the margin in your account. The stubborn Forex trader will insist he’s right, and walk away with no money; but at least he’s right. This is not a good thing. It’s all about Forex tactics. There are many perspectives and vantage points one can look at when diagnosing any particular Forex trading pair. The current market in the EUR/USD is one particular example.
By looking at the daily chart, it doesn’t take a technical genius to conclude that the market is rising. The logical trade would seem to be on the long side and ride the trend to the resistance, which right now seems to be around the 1.3300 level. However, interestingly enough, there’s another perspective and another way to look at this Forex trade that may not seem so obvious. It is a minor detail that, particularly for the novice Forex trader, can be easily overlooked. Again, it is all about Forex tactics.
The market seems to keep closing on or near it’s daily lows. Now, if you’re a long term Forex trader and you’re riding the trend for the duration, you need not pay specific attention to this little factoid. As long as the trend continues upward, you’re sitting pretty. As a matter of fact, because it’s closing on or near its lows, it is providing further opportunity to add on to a long position. You can’t go wrong, and there’s nothing wrong with that. Forex Tactics
The other angle to this story is that of the bearish trader. By first glance, it doesn’t seem like the Forex bear has much of a chance in a market like this, but the opposite is true and it’s all because of those closes. If you’re a day trader, and you’re going short the EUR/USD market at around the 1.2900 or 1.300 range; and then getting out and covering your shorts (yes…that is a legitimate phrase) at the close, you’ve made a nice profit for the day.
Because many in the market are feeling nervous that it may be overbought, there has been a sell off near the close. This is the reason for the drop. It doesn’t make the market any weaker. It only represents a tentative profit taking situation. It seems as though Forex traders are being hesitant about going home with positions, perhaps because of some fundamental news coming out and the market’s reaction, or lack of reaction, to the Forex fundamentals.
As long as you keep your stop-loss close on the short side, this certainly is Forex tactics that may deserve consideration. It’s another perspective on the same Forex market. The same amount of money can be made from the short side or the long side. It’s just another set of eyes seeing the same thing differently.