Impulse forex trading
You can earn money in the forex market in different ways. Today I will tell you about impulse trading. It is quite popular among traders. However, this method of earnings has its own characteristics. It has both advantages and disadvantages. Impulse trading involves entering the market on a sharp price movement (impulse). In its amplitude, the price at such moments significantly exceeds the fluctuations that are usually observed during the trading day. Quotes go a long distance in a matter of seconds.
The reason for the formation of momentum in the market in most cases are fundamental factors. For example, this may be the output of macroeconomic data that is very different from the forecast. This includes decisions made by large Central Banks, as well as unexpected events in the world.
Features of trade on impulses
in due time to trace an impulse it is necessary to have knowledge of two questions. First, the trader must review regularly calendar of important economic news and highlight among them those that can lead to strong price movements. Secondly, he should be aware of the amount of average daily fluctuations in quotes for the traded currency pair. If the price has passed most of the daily range within a very short time, then perhaps such an impulse is better left out and refused to open a deal. Impulse trading is short-term, meaning trade warrants open and close inside the trading day. Strategy such a trade is very simple. A trader enters the market when he sees that there is a sharp increase in price in the market. And when the easing momentum becomes apparent, the trading position closes. As a rule, after a pulse, the price returns to the original level.
Example of momentum in the forex market:
Pros and cons of impulse trading
If we talk about the advantages, then there are two. Impulse trading allows you to earn a good profit in a short time. Profit can be calculated dozens of points. Sometimes the price goes a distance of 100 points or more. The second advantage of such trade is the lack of correction. The price is moving rapidly in one direction. Which means the trader doesn’t face a serious downturn.
Of course, impulse trade also has its drawbacks. The main of them I consider the rapid development of events in the market. The price can soar very quickly and fall just as quickly. In this regard, the trader should have not only emotional stability, but also fast reaction to what is happening. For this reason, I do not recommend that market beginners engage in impulse trading. To begin with, you need to gain experience in trading in a relatively calm market.
Record Impulse trading on forex first appeared forex-for-you.ru.