This guide covers a simple forex trading strategy using momentum movements. We are going to spend some time focusing on impulsive and corrective moves in an attempt to explain market behavior during the trading week. We’ll cover currency patterns, implications for strategy, the trader’s goals and when to start impulsive actions.

Currency patterns

It’s no secret that the currency market has two characteristic patterns of movement:

1) Impulsive movements
2) Corrective movements

Impulsive moves

Impulsive moves of 1 directed. These moves are quick, and they tend to achieve their goals quickly and in a timely manner. These movements are rolling, and it is unlikely that anything will stop them. All support and resistance is gone and the currency moves endlessly in one direction.

Corrective movements

Corrective steps do not have a clear direction. They bounce up and down and down and up. There is no clear direction. In these areas, we see the currency form flags, triangles, wedges, sideways consolidations and many other corrective patterns. The end result is that the currency goes virtually nowhere. It just oscillates back and forth.

According to statistics, currencies spend at least 70% of their time in corrective trading. Again, currencies have an impulsive nature​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​ 30% at the most, is more than 30% of the time. Trading in the Forex market is simple, but not easy. That’s why the trading strategy guide offers valuable tips every day on how to trade the Forex market. This statistic has important implications. Also read about The best forex indicators for generating buy and sell signals.

Consequences of strategy

Logically speaking, this fact has huge implications for any trader’s Forex trading strategy or strategies. Typically speaking traders have Forex strategies that focus on either trend-following (impulsive) setups or range-bound (corrective) setups.

Some try to trade both, but it definitely requires a high level of experience and a great skill set. You can also read the article on how to check if yours investment is backed by the right strategy.

For most traders, the best value-to-risk ratio is to catch impulse moves. why?

Impulsive moves have the following advantages:

  • Impulsive actions quickly achieve the goal
  • Impulsive moves have the best high risk reward

There are several advantages to growing your business quickly:

  • The trade can be moved to a break-even status more quickly, allowing the trader to recoup their margin. This, in turn, gives the trader an opportunity to enter into a new trade. Also here you can learn about forex volume indicators.
  • The trade will reach the goal faster, allowing the trading capital to grow faster.
  • Impulsive moves create less psychological stress for traders because the trade is ready and running. In some cases, the trade may even be at break-even and all the risk is off the board. Trades that are open and indecisive for long periods of time create uncertainty in many traders.

Impulsive moves, however, rarely happen. Not so much a rarity as a danger. But it is still clear that the currency likes to adjust. Roughly speaking, 3 out of 4 times the Forex market is in this correction mode, so this is definitely a significant period of time. Here you can read and get information on how to trade gold.

The goal of the trader

Therefore, a trader’s goal is to spot impulsive opportunities and assess the likelihood that an impulsive move will actually unfold. A Forex trading strategy that includes it in the plan is pure gold. This is the best answer anyone can give to the question of how to trade the Forex market.

This is a difficult task that requires a sharp and experienced eye. However, there are areas where the currency has a higher probability of making a push.
Trend trading, for example, increases these probabilities.

This Forex strategy allows traders to focus on catching impulse moves as most of these moves are in the same direction as the trend.

Of course, there are impulsive corrections as well as slow trend movements.

If the trader is skilled enough to catch the corrective waves, then this is an added bonus. But as long as the trader is consistently making profits, following the impulse trend mode is a wise idea. On average, corrections are much less predictable than impulses. Also, read on trading discipline which is also the most important skill for successful trading.

When do impulse movements begin?

The big question is, when do impulse movements actually start?

This is the most difficult question a trader can imagine. And it is not easy to answer. However, here are some guidelines you can use to identify areas of correction and areas of impulsive behavior.

The irony is that most traders try to chase a sustained momentum. While this in itself can provide good opportunities for experienced traders, it turns out to be fatal for many traders. why?

Many traders are lured into the market when they see momentum. This can be partly explained by the psychological elements of fear and greed. Here is another article about the best technical indicators for forex trading.

A trader sees the action in the market and does not want to miss the profit boat that is sailing. So the trader takes a leap of faith. However, jumping into ongoing traffic can have adverse consequences without sufficient preparation. In many cases, the currencies are returned to the trader just as the trader decides to execute the trade. How many readers recognize this phenomenon? Please write a comment in the section below.

Anti-impulse corrections are key takeaways

Since corrections are long and impulses are short, the statistical probability that the impulse will continue once it is on its way is reduced.
After a correction has lasted for a significant period of time, the chances of momentum coming soon really increase.

This is almost the opposite of what comes naturally to a trader. But the greatest reward can be achieved if the trader is able to catch the reversal just before the impulse movement begins. There lies the greatest potential a trader could wish for. Use this knowledge wisely.

Here is an example of GBPUSD from the past trading week.

We hope we have helped you in your search for how to trade the Forex market. What have you noticed about your impulsive actions and currency patterns?

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With over 50 years of combined trading experience, Trading Strategy Guides offers trading guides and resources to educate traders in all walks of life and motivation. We specialize in teaching traders of all levels how to trade stocks, options, forex, cryptocurrencies, commodities and more. We provide content to over 100,000+ active subscribers and over 2,500+ members. Our mission is to eliminate the lack of good information for market traders and simplify learning to trade by providing readers with a detailed plan with step-by-step rules to follow.

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