One of the absolute cornerstones of the way I trade, and a key takeaway from this ebook - is that I only trade markets that have a lot of momentum, and the more momentum the better.
It is important though that you use your own discretion and experience as you go along, and develop your own standards for how ‘parabolic’ a market has to be before you trade it.
As you should know there are - generally speaking - two market conditions. A market is either is trending or is ranging, and depending on what measure you use, it is possible to determine which is occurring at any one time.
I further divide trending markets into two separate categories - namely a regular trend and a parabolic trend.
The following is a normal trend:
The following is a parabolic trend:
The difference between a standard trend and a parabolic trend is the level of momentum that each contains, and how quickly it has moved from one price point to another. As you have seen from the above images, a parabolic trend will have clearly stronger momentum than a standard trend.
It is fundamental to my trading system that average trends are ignored, and only the strongest trends gain my attention. Why not trade the strongest and fastest markets exclusively, and leave the rest for everyone else? What have you to lose from discriminating against sluggish, slow or erratic market trends?
As discussed elsewhere in this ebook, Forex Trendy is the tool I use to find the best current trends across the entire forex market. It is the best tool I have found that doesn’t come with a massive price tag. My view is that for ease of use and value for money, Forex Trendy is an invaluable addition to a developing trader’s arsenal, which has the potential to save you countless hours of analysis.