Forex Learning – To trade in forex trading, you must find the right time to enter or exit a position. In addition, you must have a “solid” mentality when the price target has not been achieved as desired.
You need discipline because it is one way to get profits in trading.
Impulse is a system designed by Dr. Alexander Elder to be able to identify the entry point that matches the right momentum. An indicator that can measure momentum in the market will be a strong capital for traders.
How to open a position
One indicator that can identify the market is an exponential moving average indicator (EMA)
This indicator serves as a tool to determine the movement of uptrends and downtrends. When the EMA looks up, the price potentially will turn bullish, and when the EMA looks down, the price looks bearish.
To measure market momentum, traders can use the moving average convergence divergence (MACD) histogram, which is an oscillator that can display changes in bull and bear movements. When the slope of the MACD histogram rises, the price will move bullish. When MACD falls, the price will move bearish.
This system will issue an open position signal when both indicators move in the same direction.
If the signals from EMA and MACD histograms move in the same direction tend to provide information that the price is moving in an uptrend or downtrend condition. When the EMA indicator and MACD histogram move up, the bullish trend will have control of the trend, and the uptrend will accelerate. Conversely, when the EMA and MACD indicators fall, the bearish trend is in control and the downtrend will dominate the market.
The principles above are one way to identify points of open position on trade. If the period you use is on the daily chart, then you should be able to analyze the weekly chart to determine the bullish or bearish movement. To determine the long-term trend in the market, you can use 26 EMA on the weekly chart and the MACD histogram on the weekly chart.
After the long-term trend is obtained, then you can use the daily chart that you use to follow the trade directions seen on the weekly chart.
By using the 13 EMA on the daily chart and the MACD histogram 12.26.9, the price potentially will signal to open a position.
When the weekly trend rises, and the open position signal will be seen on the EMA 13 and MACD histograms that appear and give a buy signal that is strong enough and opens your chance to open long positions.
Conversely, when the weekly trend is moving down, wait for the EMA 13 indicator on the daily chart and the MACD histogram gives a bearish signal. Momentum like this will be a strong signal to open short positions, and you have to close short positions when the sell signal disappears.
Trading forex by looking for the right momentum to open a position when the market is moving is an absolute requirement. As we know that the price moves in the trend every week, and the best movement is the movement that regularly shows a strong intra-day trend.
As mentioned earlier, after you can identify and open trading positions with strong momentum (daily EMA and MACD histogram both move up or down).
You must have the right momentum out of your open position. The MACD daily histogram usually (but not always) will give a signal, when momentum moves upside down and begins to weaken, the moment gives information that the position that is open tends to be closed. The exit signal will come out when these two indicators move opposite.
When the weekly trend moves down and the daily EMA and the daily MACD histogram fall, this is the right time for you to get out of the opened long positions until one of the indicators stops issuing a sell signal.
Exit points require quick action and the right time when the trend is identified seems to be nearing an end.
Do not forget…
Always use a forex demo account to test the article above.