The popularity of forex trading is to make hundreds if not thousands, of new traders in the market every day. Most of these new participants are familiar with the currency, since they bought the trading book, course or some other tool that promises to forecast which direction the market will go in the future. All that's left to do is to place trades and reap the rewards.
Unfortunately, even the best methods do not work all the time. Some loses are inevitable, even expected. Some can last for a longer period. During this time traders, newbies and experienced alike, begin to doubt their trading systems and search for a new angle. It allows access to many sources of information. Trouble is, there can easily be information overload, causing total confusion. The trader can not decide which direction to trade, lost confidence in his abilities and his decision-making process becomes erratic.
There are ways to trade without guessing or even care how the market will go over some period of time. One of them is using the surrounds. "straddle" and placing buy and sell orders above and below the current price. When this happens, the trader is said to be "straddling" the market. The merchant also has no bias directions, only expected to move either way. Most straddle method of trading will have all the other elements of trading in place: stop / loss of both legs of the straddle, target price or the length of the trade
.There is a whole systems based on this style of trading. Some of them do nothing but place orders affected the entire time. Traders never care which way the markets will go, until they move. These types of system calls to update orders every predetermined time interval. For example, once a day. This means that the old orders / trades must be canceled / closed each day at the same time. That is when new orders are placed. People looking for a mechanical trading strategies may find this approach is suitable because he did the same thing over and over again, without the due diligence.
The second method involves the use of surrounds the core notice. Many of these events cause rapid price movements, but the direction of moves after the number of releases is notoriously difficult to predict. Especially popular among the traders are FED interest rate announcement and the release of unemployment data. These are also the time when a great deal if there is a reluctance, which resulted in both legs of the straddle is stopped. Despite its popularity, it is perhaps the worst way to use the surrounds.
more promising approach to capitalizing on range contraction. This can be done on most time frames 4H higher. For example, if the daily trading range of individual currency pair start to get smaller and smaller, it is likely that more action will follow. a longer period of contraction, the greater the potential move after him. If someone has a hard time deciding which way to trade, it would be very easy to locate straddle order. A very simple way to implement this strategy is to take orders over the previous bar high and the low. Stop loss could be around half of the bar range, and target something like twice the value of the stop, or perhaps close the position at the end of the time value used. For weeks at least in the immediate vicinity will be the end of the week, daily bars will dictate the closing position at the end of the day.
These opportunities happen all the time, depending on the time frame. The current example is the monthly chart of EUR-GBP. Ranges of the last 3 bars are getting smaller, which may represent an opportunity for a successful straddle trade. buy order can be placed at 0.8035 and sold at 0.7840. Protective stop of 80 pips for each order is about right. The goal of profit of 150 pips in line with risk. An alternative exit to the end of July, regardless of the gain or loss.
Trading around is very easy to implement and can be profitable. As with any trading strategy, there is potential for loss. If you decide to use them on a regular basis, a mechanism for precise level of stop / loss and profit must be included. All of the straddle-based trading systems can be especially attractive for traders who do not have time to spend all day in front of a computer.