Trading reversals: Trading against the market

Forex Trading Nigeria

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Posted by on Thursday May 3, 2012 15:41:22:

Today I decided to trade a bit against the market. Actually, you should not trade against the market if you don't study the charts yet or know when a reversal is about to take place. So the idea is to trade against the market for profits only when you are sure from your analysis that a reversal is about to take place.

So what I did was put my EURUSD charts on the 4hr frame and was lucky to see an inverted hammer which is a sign of a pending reversal. The tredn had been bearish for over 24 hrs and I just thought why not start buying so I set some couple of buy stops for entry and from every possible low point I could think of. Luckily, during Draghi's speech during the NY session, euro appreciated and flew to over 80 pips. It was a green day and my Long position accumulated to give me some good profit.

4 things I normally use to trade against trends
- When I see a hammer or inverted hammer with the 4hr chart
- When RSI starts to point in the opposite direction or shows a horizontal line
- When prices starts to range or steady after a large move
- Buying from lows. At least if I'm wrong, won't lose much.