Yesterday we discussed staying in a trade (EURUSD) that was at 184 pips and ended up at 257 pips. It has now dropped another 158 pips . The initial target projection was 30 pips so you can imagine the increase in projected trade profit when the increase is over 800%. If I had not exited, the increase would have been over 1300%. This is what trading with momentum can do for the trader. But my method of trading momentum is going to be different than anything you will find in a book or anywhere else on the Internet. I know this because as I began to discover this I read and researched in a very wide circle as I tried to find someone that could help me with what I thought the retail trader should be thinking when trading currencies. If you don’t understand momentum you will continue to enter trades that go in the other direction or sit blinking at you. If you understand momentum you will suddenly begin to understand how and when to trade currencies. It has changed my entire perception of trading and it began with the Dow Trade.
In the Dow Trade I typically shoot for a trade where I think momentum, not volatility will get me 30 pips. The idea for the Dow Trade and successful currency trading is to understand momentum (not from indicators) so that there is minimal to zero drawdown allowing the trader to trade larger positions with less risk. That is it in a nutshell however there is more to it than that and once a trader begins to understand the concepts, they will completely transform their thinking. You won’t learn this from Pring or Babypips or any other website. Even when I looked at market sentiment thinking it did not help. In most cases, all of the thinking revolves around patterns. Market price patterns occur but they are inconsequential. Yes at times it appears that it is the pattern but it is not. It is the underlying momentum which comes from memory and memory is what exists in the mind of the market after volatility. See how you can get a Free gift from You Learn Forex below the chart.
Check out yesterday’s post to see more about this trade: Reading the Market on the Day of FOMC Statement and Fed Fund Rate
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