New Century International

Sometimes, when currency market doesn’t show a clear-cut trend because it keeps moving upward and downward, it leaves an investor in a lurch. In such a volatile market condition, many prefer short term trading. Short term trading can reduce the lost if it is done right. It also may limit the return on the investment. As with all trading, there are no guarantees. You have to be able to absorb loss and hang in there for a good return. For some investors, this is worth it. Here are few pointers suggesting how to identify profiting short-term trends.

One strategy for trade set-up has two Forex charts with different time frames

1. A 10-minute Forex chart
2. An hourly Forex chart

The charts should have two technical indicators, a 200-bar moving average and a 14-bar slow stochastic study. To identify a trend, broker must compare the moving averages on both of these charts mentioned above. A trend tends to develop when a currency rate is constantly on an upward or downward movement of averages mentioned on both charts.

Second strategy could be pinpoint entry wherein once a broker foresees a trend appearing, he has to simultaneously look at the two conditions on the 10-minute chart, i.e., whether the price is not more than 20 pips above in a buying situation or 20 pips below in a selling condition.  Another situation could be when in a buy situation the ‘fast’ stochastic (%K) crosses above the ‘slow stochastic (%D) below 20, or goes down the ‘slow’ stochastic above 80 in a currency selling situation.

Under ride the trend strategy, on a long position, the stop order should be 10 pips down the 200-period MA on a 10-minute chart. Broker raises the stop as the trade starts going in his expected direction.  Whereas on a short position, broker puts the stop 10 pips upwards the MA and then he lowers the stop as the trade goes in his favor.

However, short-term trading involves great risk factor. One cannot be successful betting on the above mentioned strategies since the market conditions are always unpredictable. Trading via short-term route needs a disciplined attitude, hard work, and mastery of the short term trading game strategies. The way one can achieve 20 to 50 points in a minute, also tends to lose points that faster too, so it’s up to the investor or broker whether he can take such a risk.

Nevertheless, that does not mean that a broker should give up a thought of short-term trading, because there are moments when one can make huge profits on intra-day trading. For instance, if a particular currency pair is strongly trending upwards on the 30 minute and 4 hour charts, yet is oversold on the 5 minute chart after a brief retrenchment, then it can prove to be very profitable to use the shorter term charts.

To find out more about short-term Forex trading, contact New Century International today and talk with one of their financial experts. There are no maximum limits and you can get started with the minimum of $5000.