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3 Things to Help You Learn Momentum In Trading Forex To Increase Profit

Here are 3 things that will help you today in your Forex trading.

How often have you placed a trade and the market moves against your trade? How often have you placed a trade only to see your stop taken out almost immediately? Would not it be nice to enter a trade and see almost no draw down or none? How is this possible? If it is, would not we see our trading improve and our profit?

1. What is Momentum?
2. What is Memory?
3. How to read the Market for Momentum

1. What is Momentum? – This is not something you can get from an indicator like RSI or MACD. You can not see momentum before it happens. You can learn to intuitively predict it however. So, what is momentum? Momentum is when the market moves. That sounds pretty basic but 80% of the time the market is not moving. Why? The market moves when people / banks / central banks / hedge funds (the people with the most money and leverage) decide to place orders in the market. In short, people who have money move the market. Our job is to figure out when and what direction.

2. What is Memory – This is a term coined by Benoit Mandelbrot (if you do not know who he is Google his name). Mandelbrot says that everything that is in price is not there all the time, there is a memory involved with information that causes people with money to dispense trades over time. A bank for example, wanting to rid themselves of Euros and / or dollars can not do it immediately. This takes time and Mandelbrot called it Memory. Momentum is Memory being dispensed.

3. How to read the Market for Momentum – This article can not go into all the ways one can read momentum in the market but here is one. Equity markets affect certain treaties. One indication of market direction then is the direction of markets. Currency pairs react differently to equity markets, and in particular the Dollar pairs.

Consider taking momentum (the reason the market will or will not move) and the direction before you enter your trade. If you do this may be very helpful into reducing your draw downs and losses in trading. One of the areas that many traders do not consider is improving their draw downs. This alone can improve a traders profitability, sometimes better than any other technique and momentum and momentum direction can do that for the trader.


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