weekly trading lesson

Weekly Trading Lesson: Various Points of View

Tuesday, 20 March 2007 13:44:40 GMT  |  Adam Rosen, Senior Course Instructor

When searching for the next trade, we should keep in mind the market can be viewed by many different angles, each with its own unique perspective. Each technical indicator allows us a slightly different basis of comparison in which we can judge the market’s trading activity, in respect to its recent historical movement. With this said, we should also be aware under what light each indicator reveals the market’s tone. While the Bollinger bands indicate the relative state of volatility, simple trend lines show us the progression in regards to the amount of price movement over a specific period of time. Occasionally these independent signals will meet in what we may consider a valid trade signal. For example, the following (15-minute) chart shows the EURUSD as it recently broke above an up trending resistance line. As this resistance was broken, this same price level may now represent our new support. What’s more interesting is that at the same time, the market dipped below its lower Bollinger Band, indicating the market now stood a better chance to reverse back to the upside. Putting these two factors together can help isolate only the best possible trading points that represent the greatest potential reward, least amount of risk, and the best probabilities of success.

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