Forex Factory helps the Bull and Bear announcement trap Forex trading strategy
Bull and Bear Traps
Bull and Bear traps in trading are as old as the hills and have been used by traders for decades.
What happens is that when there is an announcement or special event some of the big players get a good idea in which the market will move after the announcement. So what they do is start pushing the market in the opposite direction just before the announcement. So why would they do that? They can then purchase at an advantageous or better price prior to the announcement or event. When the new trend breaks they have purchased at a more favourable prices.
The Forex Trading Strategy
Smaller traders have realised that this is happening and have noticed this move in the “wrong” direction prior to Forex announcements. So they have climbed of the band wagon and also purchased at more favourable prices just prior to the announcement.
Inexperienced traders often fall for the trap. They think that because the price in moving in a certain direction just prior to the announcement that, that is the direction the price will break. They have been caught in the Bull or bear trap facing the wrong way.
Forex Factory Charts
How reliable is this technique? That is where Forex Factory price charts are so handy. Their price charts show historic announcements at the bottom of each chart. So you don’t need to wonder about the reliability of these trades. Simply use the 5 minute or 1 minute charts to back test this Forex trading technique.
It is very important to convince yourself of any technique before using it so back test this Forex Trading Strategy using the Forex Factory charts and make this strategy your own. This will allow you to trade the strategy with full confidence in future.
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