Forex Trading Techniques: The Ultimate Three Strategies

Picture of light shining on title of blog 9 Three Forex Trading Techniques including Forex Scalping

Hi friend!  It’s time to shift gears, and turn our attention to the forex – more specifically, Forex Trading Techniques: The Ultimate Three Strategies – forex scalping, forex swing trading, and The Shotgun Trade.

I was encouraged to take up this challenge by a recent e-mail I received about what to do when the forex goes stale (i.e., low forex volatility).

I have a very simple answer… forex scalping (an intraday trading strategy) is always in vogue – and very profitable.  It just requires that you crank the microscope down to the 5 minute chart, and stay there.

After I rev up your engines with that money-maker, I’m going to show you the other two ways of crushing it in forex with pair trading – forex swing trading and The Shotgun Trade.

As to the forex going stale, I get into that too with an update on where the new forex liquidity is coming from.  You’d be surprised.  I’ll give you a clue… it’s not the big banks.  They’ve largely headed for the hills in a blaze of glory.

Check out the full slate of topics covered in this blog post in the Index that’s coming up right after the Forex Tip and quote below.

So, strap in and listen up closely friend.  This blog’s for you.

Forex Tip

Achieving 20 pips a day in a standard forex account translates into US$4,000 per month, which is more than most people make in their day jobs.

That is totally achievable, if you follow along with me in my blog posts on the forex, wherein I will show you how to make it happen through the application of sound forex technical analysis and the implementation of the right forex trading methods.

Stay tuned for future posts beyond this one.  More forex trading tips are coming your way.

2-see-a-quote-from-a-trading-behemoth

(Martin S. Schwartz is a champion day trader, whose killer instinct and nerves of steel made him the best of the best, and earned him the distinction of being called ‘Pit Bull.’)

If you would like some forex trading tips for beginners, please contact me in that regard.

Index:

Forex Tip
Introduction
Forex Scalping
Forex Pattern
Forex Scalping Summary
Forex Scalping Examples
Forex Swing Trading
Forex Times Zones
The Shotgun Trade
Commitments of Traders
Uber Forex Broker
Smart Phone Apps
The Forex Pie
Forex Major Pairs
Forex Pip – Pip Value
Forex Spreads
The Highest Pip Value
Forex Liquidity
Forex Tools
Forex Risk Management
Forex Trading Indicators
Quotes
References
Conclusion

If you’re short on time, just click on your topic of interest above, and go there.  You can always come back for the rest.

Introduction

I’m opening my kimono, and showing you how to get the results you deserve from your hard work – your slice of the forex pie.  I guess you could almost consider this a mini forex trading tutorial, given I cover so many topics here.

So, be sure to hang with me, and then contact me with any questions you have, or if you just want some more free forex training.  It will only take you 30 minutes to get all the way through this blog post.  Enjoy!

Have you worked your butt off trying to get your forex trading right?  Have you been using the ‘trade and pray’ approach all along?  How’s that been going for you?  I thought so.  So what’s next for you?  Keep reading…

You ready?

Let’s do this.

Forex Scalping

A picture of a speedometer with a comment on it about forex scalping.

This is one of the hot pair trading topics-du-jour.  It is a sweet intraday trading strategy.  Following this, I’ll get into forex swing trading and The Shotgun Trade.  All three forex trading techniques rely on forex support and resistance levels to varying degrees.

Study the chart below for the GBPUSD pair, and then follow along with my narrative after it.  But, before we get there, I should point out that you don’t necessarily have to pay attention to any of the higher-level forex trading charts in order to scalp off the 5 minute chart.

You just have to scan through the various pairs on the forex trading platforms at your forex broker, looking for tradable situations on the 5 minute chart that look somewhat like what you see on the chart with respect to Bollinger Bands and RSI.

What we’re looking for is volatility and a forex pattern – a Downtrend Continuation Pattern (DCP) in this case – and to pay attention to price action as it relates to forex trading indicators, like Bollinger Bands and RSI.

Not all pairs will have a 5 minute chart that looks like a potential candidate for forex scalping, but you may end up with a few to work with.  That’s enough.

And, not all forex pairs will display the DCP forex pattern we have here, or any others for that matter.  I am mostly interested in those two forex trading indicators – Bollinger Bands and RSI – and volatility.

As with all forms of forex trading, the pre-trading homework is the tedious part.  I know, I know, I know, you just want to fire-fire-fire – not ready-aim-fire.  We all have a need for speed.  But, that will get you into a whole pile of trouble, if you’re not careful.

Once you have done your pre-trading prep, finding tradable situations will be the easy part – and pulling the trigger even more fun.

Okay, enough of this preamble.  Now, get back to critiquing the 5 minute chart below, and then have a look at what I have to say about it on the other side.

Screen shot of 5 minute chart for GBPUSD forex pair showing DCP forex pattern & four trading points.

(Chart via ProRealTime.com)

I have doctored up the above 5 minute chart so that you can get a pretty good idea of what’s going on.  It’s a pretty busy chart, so it may take you a while to get your head around the salient points.

If you would like to skip ahead over the detail to see the summary, click through to the Forex Scalping Summary, which will then take you to some more examples. 

What we have here is price in a downtrend in the form of a forex pattern – a Downtrend Continuation Pattern (DCP) unfolding – unlike the Uptrend Continuation Pattern (UCP) I covered extensively in previous blog posts –  Stock Trading Stops, Stock Market Successful Trading Strategies, Stock Trading Rules, and Three Winning Stock Trading Strategies.

I have a diagram of this DCP forex pattern coming up later on, so you can see what a forex diagram looks like drawn out.

What I would like to draw your attention to are the forex trading indicators I have plotted – Bollinger Bands, MACD, and RSI.  They are very important in terms of throwing off buy signals.

You can see the buy points, in each case, where price exceeded the lower Bollinger Band, RSI went oversold, and MACD told its own story – MACD divergence in the first instance, and MACD punching up through its trigger line in the second.

Okay, there is another trading opportunity that may not be completely obvious to the untrained eye.  At the end of the Price Equilibrium or Consolidation (PEC) phase, where I have marked Sell 1, you can see we had a second incidence of MACD divergence – in this case, signalling that price was about to fall – and, fall it did in the form of Leg 2 down.

Now, I should point out to you forex Fibonacci aficionados out there that the PEC phase usually consummates at a strategic Fib level, and Leg 2 down usually consolidates at another strategic Fib level.  Those are two key forex Fib levels.  Their numbers are not important for purposes of this discussion.  

If you don’t know anything about Fibonacci, that’s perfectly fine.  I didn’t understand it for the longest while.  The main thing here is to recognize the forex pattern (DCP) unfolding. 

Leg 2 is usually the same length as Leg 1 – so, by going short at the conclusion of negative MACD divergence, at the spot Sell 1 on the chart, you know that your profit potential is the length of Leg 2, after which you would collapse your trade.

And, there is even yet another trading opportunity, which you may have noticed.  Let’s go through it.

After the second buy, signalled by MACD punching up through its trigger line, you would hold that trade as long as MACD is above its trigger line.  And then, you would collapse it, when MACD punches down through its trigger line.

At that point, you could even go short, where I have marked Sell 2 on the chart, and hold that position as long as MACD remains below its trigger line.

So, there you have it – four trading opportunities – all off the 5 minute chart.  How’s that for you trigger-happy traders out there.

Forex Pattern:

Let’s review the concept of a forex pattern.  Below is what an Uptrend Continuation Pattern (UCP) looks like, and below that is how a Downtrend Continuation Pattern (DCP) differs.   These are two of the forex patterns I see all the time that make trading the forex so much easier.

Of course, if you want examples of what a forex pattern like UCP looks like for real, check out my posts Stock Trading Stops, Stock Market Successful Trading Strategies, Stock Trading Rules, and Three Winning Stock Trading Strategies.

A diagram of the Uptrend Continuation Forex Pattern (UCP), showing all three phases of it.A diagram of the Downtrend Continuation Forex Pattern (DCP) pattern, showing all three phases of it.

A picture of a dart board and arrow with the forex scalping words ‘Scalping Works’ on it.

Okay, so let’s get back to my opening remarks about forex scalping.  By now, I’m sure you’ve had a chance to study in detail the five minute chart  of the GBPUSD pair I presented earlier, wherein you can clearly see how powerful forex trading indicators like Bollinger Bands and RSI are, when they are used together.  MACD is a bonus, if you plot it too.

Forex Scalping Summary:

Let’s summarize what we saw…

There are two buy situations (Buy 1 and Buy 2), where the Bollinger Bands go outside the lower band at the same time RSI goes oversold.  In both cases, MACD confirms the trade, together with MACD divergence for the first buy.

Nothing else is required to make those trading decisions.  You don’t need to include MACD, but I did so for this particular example out of sheer habit, as it is one of my favourite forex trading indicators.

There is a third trading opportunity towards the right on that 5 minute chart, where you can see the spot I marked Sell 1.  This is where the first buy is collapsed, and an opportunity opens up to go short for the second trade.

Sell 2 comes into play, when Buy 2 is collapsed, where price exceeds the upper Bollinger Band, and RSI goes overbought, followed by MACD punching down through its trigger line.

In sum, four straightforward forex scalping trades off the 5 minute chart, which cements this concept as one of the three successful trading strategies I am presenting in this blog post.

Forex Scalping Examples:

Let’s have a look at three more examples of pair trading off the 5 minute chart – using nothing more than Bollinger Bands and RSI this time.  Here they are:  AUDUSD, USDCHF, and USDJPY.

Let’s take them one at a time.

AUDUSD:

Again, I have plotted those two forex trading indicators, Bollinger Bands and RSI.  You can see where price went outside the upper Bollinger Band, all the while RSI went overbought – extremely so in both cases.  Shorting the forex pair accordingly is a no-brainer.

Screen shot of 5 min chart for AUDUSD forex pair showing pair trading in the form of forex scalping.

(Chart via ProRealTime.com)

USDCHF:

Pretty much the same story here, only this time we are looking at a picture-perfect buying opportunity, where price exceeded the lower Bollinger Band, as RSI went oversold (extreme readings in both cases).

Screen shot of 5 min chart for USDCHF forex pair showing pair trading in the form of forex scalping.

(Chart via ProRealTime.com)

USDJPY:

Same for this forex pair – another great buying opportunity.

Screen shot of 5 min chart for USDJPY forex pair showing pair trading in the form of forex scalping.

(Chart via ProRealTime.com)

So, you can see how this pair trading strategy makes it one of the forex trading methods you should employ.  I didn’t cherry-pick these examples.  These trade set-ups occur day-in, day-out.  You just have to keep looking for them.

All you need to do is set up your forex trading charts with Bollinger Bands and RSI (standard settings for all indicators is fine), and then scan through all the forex pairs on your forex trading platforms, looking for pair trading opportunities, such as those that I have presented here.  You’d be surprised how many you will find.

The next time somebody tells you the forex is stale, and there’s nothing to do, just say “Blah blah, blah blah, blah blah blah blah.”  They obviously didn’t read this blog post.

By now, you should be able to see how forex scalping is the perfect intraday trading strategy.

Forex Swing Trading

A picture of a clock with motivational words on it – ‘Time Equals Money.’

Forgetting about that form of pair trading for a minute, you’re probably asking yourself, “That’s all fine and dandy, but what about forex swing trading?  Well, I have an answer for that too, as with all things forex.

This form of forex pair trading is an excellent example of the practical application of forex trading techniques.  And, it is perhaps one of the easiest and most successful forex strategies you will find any time, anywhere.

Just have a look at the sessions and times in the picture below.  The times are approximate.  The forex swing trading opportunities are in and around those forex time zones.

The forex time zones represent when the forex swing trading points usually occur in the forex. Translation:  This is where the money is.  This is when you should be at your computer, or looking at your mobile device, because this is where the forex price action is.  No need for you to keep an eye on the forex all day long.

The best forex swing trading points, and the most profitable, are the London times – ~3 am ET and ~11:30 am ET.  After all, the London session is the busiest time in the forex.

Regarding forex fundamentals, there is another potential swing point related to the 8:30 am ET news time, which is especially significant when the nonfarm payrolls data comes out. 

You can sometimes see an ensuing swing in price action, either up or down.  I will be doing a blog post on that phenomenon at some point in the future.

This is a monthly report generated and reported on the first Friday of the month by the U.S. Bureau of Labor Statistics.  It is designed to show the total number of paid workers of any business in the U.S.

Forex Time Zones:

A picture of a clock with the forex time zones to the left of it.

(Per Wikipedia, the forex operates continuously 24 hours a day, except weekends – i.e., 22:00 GMT on Sunday (Sydney) until 22:00 GMT Friday (New York).

Below you will find a number of forex trading charts showing you that these forex time zones are really there.  All you have to do is find them on your own forex trading charts.  That’s part of your homework, as you get ready to trade.

Screen shot of forex pair EURUSD 1 hour chart with forex swing trading points and forex time zones.

(Chart via ProRealTime.com)

Screen shot of forex pair GBPUSD 1 hour chart with forex swing trading points and forex time zones.

(Chart via ProRealTime.com)

Screen shot of forex pair USDCHF 1 hour chart with forex swing trading points and forex time zones.

(Chart via ProRealTime.com)

Screen shot of forex pair USDJPY 1 hour chart with forex swing trading points and forex time zones.

(Chart via ProRealTime.com)

The Shotgun Trade

A picture of a shotgun pointing away, which is used to represent the ‘Shotgun Trade.’

And now for The Shotgun Trade, which has taken me years to perfect.  The Shotgun Trade is an excellent example of the practical application of forex trading techniques.  I am pretty proud of this trade set-up because of its ease of execution and sheer simplicity. 

Looking at the two forex trading charts below for the GBPUSD pair (the 1 hour and the 15 minute), it’s pretty obvious what is going on.  I have doctored them up with enough information, so that you get the hang of the trade, just by looking at the charts. 

But, let’s go through it anyway.

The Shotgun Trade works off two forex trading charts – in this case, the 1 hour and 15 minute – but, it can also work off other combinations, like the 1 hour chart and the 5 minute chart.

The main takeaway is the divergence between the two charts, which I will explain in a minute.

Please refer to the two charts below, as I go through this.

As with everything else I do related to trading, I look at forex trading charts top-down – so, we’ll start with the 1 hour.  I have delineated the New York open (8 am ET) with a dotted line.  This is one of the forex time zones I referenced earlier.

Just before that time, we had a Golden Cross and a spike up in price action.  The trend was now up. 

Notice that, leading up to the New York open, price was above both moving averages (the 50 and 200 EMAs).  That’s important to note.

Now, let’s take a look at the 15 minute chart below the 1 hour.  This chart is a lot busier (more going on obviously at this lower level).

You should be able to notice by now the forex pattern UCP.  Without going through all the details, given that they are spelled out on the chart, the salient point here is the fact that, at the end of the Price Equilibrium or Consolidation (PEC) phase, price was below the 50 EMA (but above it on the 1 hour at that point).

This is a form of divergence between the two forex trading charts, and represents The Shotgun Trade.  MACD had neutralized back to the waterline, and then some.  It then issued its buy signal by punching up through its trigger line, thereby signalling the trade and the start of Leg 2 up, just before the New York open.  Notice the forex swing trading point immediately prior (circled on the 15 minute chart).

With a forex pattern such as the UCP pattern, Leg 2 is usually the same distance as Leg 1 – so, that represents the profit potential for the trade.  The said trade ended at the top of the chart, where you see the forex swing trading point, followed by MACD punching down through its trigger line.

Another takeaway is the fact that, as The Shotgun Trade unfolded, the moving averages on both charts were trending up.  That’s one of the things I look for in the setup for this particular trade.

And finally, notice the power of MACD.  It not only signalled the entry point for the trade – but also the exit.  Earlier on, you can see MACD divergence, which signalled the commencement of the Price Equilibrium or Consolidation (PEC) phase.

So, that’s it my friend.  Easy peasy.  The only difficult part, if there is such a thing, is doing the necessary homework to find the forex pairs on your forex trading charts that are setting up for this trade.  But, there is homework for all three forex trading techniques – this one being no different.

Screen shot of 1 hour chart for GBPUSD forex pair, which is the first half of the The Shotgun Trade.

(Chart via ProRealTime.com)

Screen shot of 15 min chart for GBPUSD forex pair which is the second half of the The Shotgun Trade.

(Chart via ProRealTime.com)

Okay, now that we have covered the three forex trading techniques I said we would – forex scalping, forex swing trading, and The Shotgun Trade – you should be able make the kind of money I said was possible in the Forex Tip at the outset.

These are the three of the most successful forex trading strategies I have perfected in all my years of forex experience.

I can’t say that any one of the three is the most successful forex strategy.  They’re all equally as good, in my opinion.

If you need some additional free forex training, please let me know at the Contact link.

But, there’s more…

Commitments of Traders

I fondly call the institutional investors the ‘Big Dogs.’  They trade thousands of lots worth millions of dollars and, as such, they deserve our attention and respect.  They can and do move the markets.  They can’t afford to be wrong, as lots of money is on the line, and lots of parties depend on them.

There is no commitment of traders indicator as such.  The CFTC releases the new data on the Big Dog positions – and those of the hedge funds and street money (read, noise traders) – every Tuesday in the form of a commitments of traders report.

This information is as close to forex alerts as you will find.  I take this notion up later on with regards to the GBPUSD pair.

The data dump looks like this:

Screen shot commitments of traders raw data from the CFTC and COT-Futures.com.

(Data via CFTC and COT-Futures.com)

Pretty unflattering but powerful stuff… it’s just numbers which, to the untrained eye, are meaningless.  Enter a friend of mine, who takes this raw data, and makes sense of it by plotting it graphically, so that it can be understood by the masses.  He does this every Friday.  It ends up looking like this, as of September 9/16:

Screen shot of commitments of traders graphs together created from CFTC raw data by COT-Futures.com.

(Graphs via COT-Futures.com)

Truth be known, what we are looking at in the data dump above the graphs, where the rows of numbers are, is futures commitments of traders report information, which is a good proxy for the forex.  I guess you could call it commitments of traders forex positioning.  After all, the forex and futures markets move in tandem.

In actual fact, whether we are talking forex or futures, we are looking at commitments of traders report historical data, given that the CFTC weekly dump is for the past week – released every Tuesday.

For this exercise, I have chosen to address the GBPUSD forex pair, which is very much in the news these days in the aftermath of the BREXIT vote and the Bank of England’s determination to stoke the economic coals.

There’s nothing more to be said than to observe the two graphs above.  You can plainly see that the Big Dogs are extremely long the pound and, that being the case, they are equally long the GBPUSD forex pair by default.

Translation:  Expect the pound to rise in the futures world, and the GBPUSD forex pair pair to go up on the forex side as well.  The two markets are joined at the hip.  It’s just a matter of time before this happens.  It’s like trying to turn the Queen Mary on a dime.  It just takes time.

This is yet another example of forex trading techniques in play.

Screen shot of daily chart for GBPUSD forex pair showing MACD divergence and possible double bottom.

(Chart via ProRealTime.com)

Uber Forex Broker

Tallinex

Have you ever dreamt of forex trading with upwards of 1:1000 forex leverage?  Well, now you can at the forex broker Tallinex.  What’s not to like about that?

On any one of their forex trading platforms, you can get a leg up on forex trading by trading better, faster and easier.

Of course, if you need my help, you can contact me at any time.  I’m always at your disposal.  I have fifteen-plus years experience with the forex, so I know that market intimately.

Check out six features Tallinex has to offer:

  1. Free signals
  2. MT4 software
  3. Free forex charts
  4. ECN raw spreads
  5. Mobile and tablet apps
  6. Forex managed accounts

I’d suggest that you open a free, no strings demo trading account at Tallinex, and then check out their forex trading platforms.  You have nothing to lose and everything to gain.

Once you are ready, you can then go on to open a live trading account, and put yourself on the path to making some serious money – with my help, of course.

Tallinex is open for business six days a week – closed on Saturdays.  Time to take a break, and catch your breath.

One of the neat things about using their forex trading platforms is their regular forex trade advisory e-mails that you would get, as well as information pieces, such as technical reviews on bitcoin, gold, and silver. 

Have a look at the personal account options they offer in the table below:

Screen shot of the personal account options at forex broker Tallinex.

(Disclaimer and Note:  Please make sure your country of residence allows you to trade at Tallinex.
Plus, please note that I am an affiliate for Tallinex.)

Smart Phone Apps

Screen shot of two smart phones with words on it – ‘Seize the Power of Dealing Currencies.’

I’m sure, if you are like most people, you have a smart phone, and you’re into apps like everybody else. 

The big international banks no longer have a hold on the forex.  All you need is a smart phone to seize the power of dealing currencies.  Mobile trading apps allow you to get access to the same technology the banks use.  Isn’t that cool?

The lines between institutional and retail trading have now blurred.  The institutionals no longer corner the best forex trading systems.

Get this… it is estimated that 40-60 per cent of transactions are now conducted on mobile devices – this up from 10-to-20 per cent, or so, just a few short years ago.  A lot of forex traders are not only mobile first, but they are mobile only.

There is even a forex trading app on the Apple watch.  You can set it to vibrate when a particular price is reached.  Beam me up Scotty!  As if that isn’t enough, there is a forex trading app that approximates a computer game, and comes with music and sound effects.  Or, how would you like to trade directly from analysis apps and news, versus through a separate broker’s app?  That you can do too.

This new generation of forex trading app applications provides a far less complex and safer environment to trade the forex than traditional desktop sites.  When you are out and about, you can dial into the market to see what’s going on.  No need to be trapped at your desktop by a ball and chain.

Smart phones are invigorating the ascendancy of the forex.  When I first got into the forex some sixteen years ago now, the throughput was around US$1.3-trillion per day.  Now, it is more like US$5.3-trillion per day.

(Some info via Jemima Kelly, Reuters, as reported in The Globe and Mail, October 21/15)

The Forex Pie

Screen shot of forex percentages by forex pair for London and Tokyo sessions with circular picture.

Forex Major Pairs

  • EURUSD: the euro and the U.S. dollar
  • USDJPY: the U.S. dollar and the Japanese yen
  • GBPUSD: the British pound sterling and the U.S. dollar
  • USDCHF: the U.S. dollar and the Swiss franc

Forex Pip Pip Value

In order to understand pair trading, you have to have an appreciation for forex spreads and the meaning of pip value, as they related to a forex pair.

The value of a currency pair is denoted by pips and spreads – the value of a currency being expressed as pips.   

One forex pip has a pip value expressed as 0.0001 for one, 0.0002 for two, etc. – with one being the smallest change in price that a forex exchange rate can move.

In most cases, currencies are represented by four numbers after the point – an example being 1.3236 for the GBPUSD forex pair.

An exception to this rule is the USDJPY forex pair, which has just two decimals after the point.

Forex Spreads

Two prices are quoted for any given forex pair – the buy (or forex bid) and the sell (or ask) – the difference between the two being the spread.  The forex bid is lower than the ask.

Forex spreads represent the difference between what the forex market maker gives to buy from forex traders, and what the take is from them.  That’s how they make their money.

Were a trader to buy a forex pair, and then immediately turn around and sell it, that trader would automatically lose money, because the forex bid is lower than the ask.  This is assuming there hasn’t been a change in the forex exchange rate in the meantime.

While the forex spreads can be as low as 1.9 for the GBPUSD, as I write this, you will find that bank quotes are significantly higher.

Forex traders benefit from lower forex spreads because a smaller move in forex exchange rates enables them to profit more easily.

The Highest Pip Value

EURGBP

The value of this forex pair – the EURGBP – is determined by having a look at the current value for the GBPUSD pair, which at this writing is 1.3236.  To derive the pip value of one pip in a standard account for the EURGBP pair, you would simply move the decimal point over to the right by one place, and presto you have US$13.24 (rounded).  This is appreciably higher than the other pairs in a standard account, which come in at US$10.

Now, that doesn’t mean you should rush out and trade this particular pair.  There are other considerations to take into account as to which pair to trade at any given moment in time.  That decision comes from following the steps in your forex trading plan.

Forex Liquidity

The Forex market, or spot market, is a constituent of the interbank foreign exchange market.  It is extremely liquid because of the introduction of market makers and the participation of millions of retail traders who trade currencies on a daily basis.  

By definition, a liquid market comprises many trades and many traders. In fact, in terms of forex volume, nearly US$5.3-trillion changes hands every day in the forex, and this number is ever-growing, as more and more retail traders get involved.  Consequently, forex trading is virtually instantaneous.

Look at who’s trading the forex now… according to the Aite Group, a Boston-based consultant, algorithmic trading has more than tripled foreign-exchange volumes over the past three years – this all the while Wall Street banks have been in retreat from currency trading.

According to Coalition Development Ltd., a London-based research firm, foreign-exchange sales and trading at 12 of the largest banks shrank some 28 per cent worldwide between 2010 and 2015.

The forex industry seized up when the banks caused a price-rigging scandal.  They were subsequently fined about $10-billion.

Their exit from the forex opened up a void, which is now being filled by Citadel, GTS, Jump, KCG Holdings Holdings Inc., and Virtu.  XTX Markets Ltd.  supplanted major banks, coming in fourth in a euro-money ranking of the world’s biggest spot trading firms.

Fastmatch Inc.’s platform chalks up $12-billion per day.  Forex liquidity from non-bank players has popped up to 75%, with banks representing the remaining 25%. 

According to Dmitri Galinov, the company’s New York-based CEO, that represents a major shift in participation, given the bank’s 55 per cent majority in January, 2015.      

The non-bank market makers – better known in stock market circles – trade almost US$200-billion a day with their algorithmic trading.  While that may seem to pale in comparison to the global currency market behemoth, consider that stock trading on all U.S. exchanges comes in at only slightly more – US$270-billion a day.

Non-banks are in high gear to provide more forex liquidity.  In the first half, Citadel Securities LLC boosted foreign-exchange volumes some 83 per cent.  Global Trading Systems LLC tripled their activity since Britain’s Brexit vote.  And, Jump Trading LLC plans to increase its direct market making.

Electronic market makers ensure that retail traders can trade as they wish.  They provide the much-needed forex liquidity, or the ability to trade without any adverse effect on pricing.

They are attempting to prove themselves as effective and reliable counterparties in the form of sophisticated technology that offers tight pricing, even when the market conditions are turbulent.  They don’t retreat on big, volatile days.

For example, upon Britain’s decision to leave the European Union, activity surged across venues run by Bats Global Markets Inc., Fastmatch and Thomson Reuters Corp. 

Non-bank computerized traders proved their mettle by stepping up to the plate, and made markets without fail, following that shocking news – this according to Fastmatch’s Galinov.  

These new forex liquidity providers appear to be here to stay, and are becoming a big factor in the forex arena.  For example, Citadel makes prices available to more than 100 clients on 28 currency pairs, and holds positions for several minutes on average.

The high-frequency traders are constantly evolving and expanding their currency businesses, which is good for retail traders, in that forex liquidity will always be in the pipeline.  If one source disappears, another is just around the corner.

As with all forms of trading, liquidity is vitally important.  The forex is no different.  The forex trading techniques I have presented in this blog post all require forex liquidity to be ever-present.

This is not a problem, given that the forex is the most liquid of all markets, especially with the market makers now on the scene.  Forget about the banks.  They have gone into hiding for the most part.

(Info on Forex Liquidity via The Globe and Mail)

Forex Tools

Regarding forex pips, if you would like a pip value calculator, here is one I like:  http://ca.investing.com/tools/forex-pip-calculator

If you would also like my pivot point calculator, please contact me, and I’ll send you a copy.

And, if you would like a good support and resistance MT4 indicator, I can provide that too.  Just use the same contact link above.

Forex pivot points are the ultimate definition of forex support and resistance levels. 

I will be doing a blog post on pivot point trading in the near future – so, stay tuned for that.  

If you want to learn how to draw trendlines like the real pro, I recommend Tom DeMark’s book, New Science of Technical Analysis.  It’s a great read, if you’re interested in determining forex trends.

Forex Risk Management

Regardless of which of the three forex trading techniques you choose to trade with, I recommend that you use a forex stop loss of 30 pips in all cases.  You will thank me, and sleep better at night.

Forex Trading Indicators

The Shotgun Trade referenced above is the best illustration of the forex trading indicators I normally plot on my forex trading charts.  I like to stick to three – the 50 and 200 EMAS (Exponential Moving Averages) and MACD. 

That said, whenever I talk about forex scalping, I like to work with Bollinger Bands and RSI, and just throw in MACD for good measure.

I didn’t include the EMAs on the charts illustrating forex time zones, because I wanted to leave the charts above MACD free of clutter, so you could see these forex swing trading points clearly.

MACD is helpful in identifying forex swing trading points on forex trading charts.

Quotes

“You can’t use up creativity.  The more you use, the more you have.”  Maya Angelou

“Your time is limited.  Don’t waste it living somebody else’s life.”  Steve Jobs

“Truth fears no questions.”

“You have to know yourself, and you have to know your enemy, if you want to win the war.”  (SunTzu, author of The Art of War)

“I haven’t seen much correlation between good trading and intelligence.  Some outstanding traders are quite intelligent, but a few aren’t.  Many outstandingly intelligent people are horrible traders.  Average intelligence is enough.  Beyond that, emotional makeup is more important.”  William Eckhardt (co-founder of Turtle Traders)

“Whenever I enter a position, I have a predetermined stop.  That is the only way I can sleep. I know where I’m getting out before I get in.”  Bruce Kovner

“Don’t be a hero.  Don’t have an ego.  Always question yourself and your ability.  Don’t ever feel that you are very good.  The second you do, you are dead.  My biggest hits have always come after I have had a great period, and I started to think that I knew something.”  Paul Tudor Jones

“I prefer not to dwell on past situations.  I tend to cut bad trades as soon as possible, forget them, and then move on to new opportunities.”  Ed Seykota

“One of the best rules anybody can learn about investing is to do nothing, absolutely nothing, unless there is something to do.  Most people – not that I’m better than most people – always have to be playing; they always have to be doing something.  They make a big play and say, “Boy, am I smart, I just tripled my money.”  Then they rush out and have to do something else with that money.  They can’t just sit there, and wait for something new to develop.”  Jim Rogers

“It gets late early.”  Yogi Berra

“Baseball is 90 percent mental.  The other half is physical.”  Yogi Berra

“The reason a lot of people do not recognize opportunity is because it usually goes around wearing overalls looking like hard work.”  Thomas A. Edison

“I’ve said it before, and I’m going to say it again, because it cannot be overemphasized:  the most important change in my trading career occurred when I learned to DIVORCE MY EGO FROM THE TRADE.  Trading is a psychological game.  Most people think that they’re playing against the market, but the market doesn’t care.  You’re really playing against yourself.  You have to stop trying to will things to happen in order to prove that you’re right.  Listen only to what the market is telling you now.  Forget what you thought it was telling you five minutes ago.  The sole objective of trading is not to prove you’re right, but to hear the cash register ring.”  Martin S. Schwartz

References

http://aitegroup.com/

https://www.amazon.ca/Pit-Bull-Lessons-Streets-Champion/dp/0887309569/ref=sr_1_2?ie=UTF8&qid=1474521197&sr=8-2&keywords=pit+bull#reader_0887309569

https://www.bats.com/

http://www.bloomberg.com/

http://www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm

http://charlesnenner.com/

https://www.citadelsecurities.com/

https://www.coalition.com/

http://www.cot-futures.com/

http://www.easy-forex.com/eu/pipsandspreads/

http://www.fastmatch.com/

http://www.theglobeandmail.com/

http://gtsx.com/

http://ca.investing.com/tools/forex-pip-calculator

http://www.investopedia.com/terms/n/nonfarmpayroll.asp

https://www.kcg.com/

http://www.learntotradethemarket.com/forex-articles/20-eye-opening-trading-quotes-from-trading-legends

https://www.prorealtime.com/en/

http://ca.reuters.com/news

http://thomsonreuters.com/en.html

http://www.virtu.com/

https://en.wikipedia.org/wiki/Foreign_exchange_market

https://www.xtxmarkets.com/

Conclusion

There you have it friend… three forex trading winning strategies that will rev up your forex trading mojo.

No matter whether you are just now learning forex trading for the first time, or if you are an experienced forex trader, you can always contact me to arrange one-on-one forex trading lessons.  I can also be your forex mentor.

If you’re not interested in self-trading the forex, you could always consider forex money management in the form of forex managed accounts at the forex broker Tallinex.

In closing, I hope this post, Forex Trading Techniques: The Ultimate Three Strategies, met with your approval.  If you wish to comment on it, please feel free to contact me, or leave a comment below.

Don’t forget the Forex Tip at the beginning of this post.  Its claim is totally achievable, if you apply what you have learned here today.  I can always provide you with some more free forex training, if you feel you need it.

I post newsworthy news items at TradingSmarts during the week.  If you would like me to comment on a topic of interest to you, please contact me, and let me know. 

If you would like to check me out, you can do so at the About link.  And, if you would like to see my previous blog posts, you will find them here:  VIX, After Hours Trading, Trading Volume, Stock Trading Stops, Currency Trading Strategy, How to Pick Stocks, Stock Trading Rules, and Three Winning Stock Trading Strategies.

If you would like to help me start a forum and be a moderator, I would love to hear from you.  Just drop me a line using the Contact provision at the bottom of my site.

If you would like to be featured in my blog, I would love to share your success story – or even your trading experience.  Please send me a message using my Contact form at the bottom of this page.

I won’t live long enough to know it all, and I won’t live long enough to make all the mistakes myself.  So, hearing your story will be most helpful not only to me, but also for my other beloved readers.

Please share this post.  Sharing is caring.  Thank you!

I look forward to your articles, feedback, ideas, stories, and suggestions for my blog.  Please post these on my blog at the Contact link below.  

HAVE FUN and ENJOY LIFE!  Remember – FAMILY comes first!

Here’s To Your Success and Quality of Life,

prbain

Peter R. Bain
PS:  Don’t let them steal your dreams!
PPS:  I will help you achieve your dreams!

About Peter R. Bain

Picture of Peter R. Bain, founder of www.TradingSmarts.com – the go-to site for all things trading.

Peter R. Bain

I am a speaker, trader, writer, aviator, car nut, Harley enthusiast but, above all else, I am here for you at TradingSmarts, which I founded some 15 years ago.

TradingSmarts is your best friend when it comes to finding anything and everything to do with trading.  Through my blog you will always find guides, news, reviews, tutorials, and much, much more.

TradingSmarts is a ‘NO-BS, No-Holds-Barred, Take-No- Prisoners’ site for traders who want the straight-bill-of-goods on how to make a full-time income trading less than part-time. 

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Peter R. Bain

I am a speaker, trader, writer,
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