Would you like to have some control over what happens when you trade Forex as a currency trader? One of the best ways to do this is to trade at the time of the Dow Open or the opening of the New York Stock Exchange. Why does this give a trader control? Because it puts them in the same position each day with the ability to read the markets ahead of time and determine the direction the market opening will move a particular currency pair.
My favorite currency pair to trade at the open is the EURUSD. This pair is very predictable when it comes to what the equity markets are going to do. Trading the equity markets is about value and risk and if a trader of currencies learns a few concepts they can learn to trade at this time and make pips in a short period of time.
Most traders struggle with when to enter a trade. They then tend to focus on technical analysis but technical analysis does not prepare the trader to locate momentum in the market. Momentum is the fuel that moves a trade in the desired direction. Without it many trades sit in one location moving back and forth a few pips at a time or the trade backs up and creates a drawdown that may be bigger than desired or takes out a stop.
Anyone who has traded for any particular time in the currency markets knows that brokers and market makers can cause some trades to be lost. One way to stop this is to trade during moments of high momentum. The Dow trade is one trade that allows the trader to trade almost 100% of the time with momentum and at a particular time during the day.
In addition, by trading at this time the trader can learn certain cues that will tell him which way the market opening will affect the direction of the EURUSD. When the trader has this information and is ready to trade then he or she can look for the proper technical signal by which to enter. One particular good signal is what is called an RSI Reversal which consists of two kinds of momentum signals; RSI Positive Reversals and RSI Negative Reversals.
Many traders who day trade trade using RSI, the Relative Strength Index. One of the common mistakes however, is thinking that because the RSI gets to 70 it means sell and if it gets to 30 it means buy. This is not the case. When trading learn to locate momentum in the market and then the signal. You will be glad you did.