I want to share with you a few tips about a trade technique I use.

The first thing I would like to say is that it isn’t always possible to make a trade when ever a pattern appears.

This is part of the reason automated trading systems don’t always work. It takes an experienced forex trader to stop and analyze the activity taking place in the market at the time a potential trade develops.

Sometimes the signals will be mixed. You might see a BUY order on your charts but the economic data and market expectations may be telling you a different story.

When I see conflicting signals between the fundamental and technical analysis, I will consider staying out of the trade even if it appears that there is a trade. I would rather watch how price reacts without risking my money than to test a theory or my ego, and lose money.

There will always be another trade and there are many to chose from.

The first thing any Forex trading strategy should include is a very specific plan that gives an exact entry and target with appropriate stop loss. But each time that pattern or trade sets up, you must confirm it with the economic data that is available or at the very least, market sentiment.

This is because not every trade will work and that’s were it takes trained human analysis.

The scalping trade I use is a specific candle pattern that is easy to use and identify. However it requires confirmation. The confirmation is what a automated trading system can not do and something that will take time to learn on your own, or you can speed up the process by finding an experienced professional to teach you to details and nuances that cant be over looked.

The scalping technique developed on both the EUR/USD and the GBP/USD. They both need confirmation and looking at the chart you can see that GBP/USD was clearly inside consolidation.

What is consolidation?
Well we all know for sure that it is not a trending environment with momentum behind any move. When price is inside of consolidation it will usually move around with no clear direction and trying to use certain trade techniques will usually result in a stop loss triggered.

So that’s our first lesson, don’t use this scalping method when price is inside consolidation.

Notice the difference between the EUR/USD and the GBP/USD.

I used the method on the EUR/USD because price had broken outside of the consolidation range and the GBP/USD had not. I watched the GBP/USD at the same time just to make sure my analysis was correct and if I would have tried the scalping technique on the GBP/USD, I would have been stopped out. And soon after price went to the anticipated target. This is an all to familiar situation for all of us. Getting stopped out yet price still goes to the target.

How do we eliminate the chances of that happening?
Looking for an opportunity for price to move in a predictable manner with momentum behind a move. The perfect example of this is the EUR/USD. This one was on its way with price breaking the consolidation and traders driving price when they saw the breakout occur.

So remember, you must know the difference between consolidation and a trending market. There are different trading strategies for each situation.

Thanks for reading,
Good luck
LC