If you know anything about trading in the international market, it is that pairs tend to go up and down. This is a good thing to know if you are going to be trading in the forex market or if you are going to be doing a reverse stock market trade. Going up in price will mean that your trade is likely to do well and increase the value of your profit. Conversely if you go down in price, your trade is likely to decrease in value and you may lose your profit.
This is a bad thing to happen to happen to your trade. Going up in price will also mean that your risk is likely to be large because you know that your trade is likely to do well.
Forex Trade Market
Going down in price will just mean that your risk is likely to be small because you know that your trade will have a low return.
It is good to stay with the flow of the market.
As with all trends, there is bound to be a divergence when you look over long term trends. You can look at average prices or analyze volatility. Average prices come from the Interbank Mark Test Center run by Nielsen.
They are based on the average volume of all the banks that are involved in currency trading.
Volatility comes from analyzing the average volatility of four different instruments: the Dow Jones Industrial Average, the Nikkei, the S&P 500 and the Nasdaq.
These are all market places that have a daily average volatility of about 3.30% and a maximum of 86.12 points. Averaging these prices gives you an indication of the day to day price changes. You can then use the following strategy to predict the price changes:
Step #1 Determine the 6 day moving average (DJIA) of the past several days. I use the 6 day moving average as my guide.
For example, I will use the 362.21 point downtrend from the high of the session to determine the high of the day.
I will use the MSQQQQQQQQQQ2 data to determine the low of the day. I will use the Q2Q2Q2 trendline data to determine the low of the day. For example, I will use the 146.89 point uptrend to determine the high of the day.
I will use the MACD trend to determine the low of the day. While a 2DQ1 trendline analysis is not new (2Q1Q2Q1Q2 and so on) this is the first time I’ve used the QFAPT method (Full Plotting Approach to Traders) and this is where the real learning begins. Not so much learning how to trade, but learning how to read charts and evaluating trends.
To calculate the QFAPT method, the standard exponential decay method is used. The QFAPT method can be used to calculate the QFAPT2, which is then used to calculate the QFAPT3 which is then used to determine the 24 hour moving average.