strategies revolve around
the assumption that markets
will hover within a
given range — and with good reason.
Seventy percent of the time
markets will bounce back and forth
between support and resistance levels,
or fluctuate randomly. The rest
of the time, market behavior is characterized
by persistent price moves
— trends — that shatter support and
resistance levels.
Although these basic probabilities
work against traders who try to
exploit trends, the potential rewards
can be worth the risk. It is possible to
increase your ability to capitalize on
t rends by locating trend signals,
identifying specific entry points
within the trend and using risk management
techniques to limit losses.
The following sections will
explain how a trading system based
on these concepts works especially
well in the foreign exchange (Forex),
or curre n c y, market, particularly
with the “major” currencies — the
U.S. dollar, Euro, Japanese yen,
British pound, Swiss franc,
Canadian dollar and Australian dollar.
More than 85 percent of transactions
in the $1 trillion per day Forex
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