Forex Trading - Spotting the Big Trends for Big Profits Part 2

by Sacha Tarkovsky

In part 1 at looked we how human psychology away prices pushes from fair value.

When there are away moves extreme from fair value make can you a contrary trade majority the to and pile up with profits big low risk.

So what tools need? you do Lets take a look.

As a general tools these rule will work in not market any just forex markets.

What sets ups look you do for?

Generally you want up set a that is the there where news is “no end to sight” in a spike move.

This generally indicates and greed that fear have taken the and hold market being looked emotionally is at driven and away value. fair from

This happens all the time:

The recent spike oil, crude in the 87 stock and crash market many others including forex the in market.

First place to start

Is the chart huge for look price spikes in spaces time short accompanied by “experts” news the and telling you there end no is in sight.

Now delve a to deeper bit see the true picture.

Useful technical tools are:

RSI, Sochastics and Bollinger bands

Then add in tools sentiment these to the mix.

% Bullish

This indictor is of poll a people, expert’s, brokers have that etc a view or the in interest market.

When this poll 70% above indicates are bullish the in is market overbought territory and 30% below when is in oversold territory.

In the currency like we markets to look for extreme more even readings of below above and 20% 80%

Commitment of Traders Traders - Net Position Report

This is a for used tool years by futures shows and traders the breakdown of among interest open three main participants.

We will explain means it what in a minute is here buy its definition of the groups.

Hedgers – The commercial money smart traders

Large speculators – normally are These large funds with reportable positions

Small speculators everyone else.

The commercials are traders term long and are close fundamentals the to and move very they – slowly are hedging not not and speculating influenced by greed and far or are the “smart money”.

Speculators on the both hand, other funds and small driven are speculators, by greed and fear

If you see up set a where commercials start the move to opposite way to a at speculators market top or hold and bottom an opposite extreme, have prices then moved to far value. fair from

With the commercials building and taking the opposite position in speculators to a rampant bull market bear or you know prices due probably are to re bound.

You must only with extremes use this tool and means normally this 8 months to 2 years.

Breaking it down

Study chart first, experts for look telling you there end no is in sight to then move, the look at % then and bullish net trader report.

Finally, use indicators technical the to confirm the move.

These moves do often. happen not

Maybe a few year. a times

But when they do

You can zero a on in contrary trade that offers only not huge profit potential low offer but risk.

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