Using a Forex Forum for Herd Instinct Trading
Most people have heard about herb instincts in relation to herd animals like sheep and cattle. However, what many people do not realise is that some forex traders use this as the basis of their strategy. The traders who use this strategy often have the term ‘the trend is your friend’ as their motto. The use of this strategy works well with forex and the use of a forex forum.
The Basis of the Strategy
The herd instinct strategy is based on the use of trends to trade. This is often classed as trend trading where you only trade when you have a definite trend in one direction. These traders base their trades on the overall view of the market and the other traders. If everyone believes a currency will go in one direction at the first sign of the trend these traders will open their positions.
Of course, with this strategy you should not blindly follow the trend as it may be short lived. You need to complete your own analysis of the market through the use of various tools. These tools will help you identify the currency pair that will trend, when the trend may begin and when you should close your position for the maximum amount of profits.
Using a Forex Forum
One of the tools these traders use is the forex forum. The forums allow traders to get information from other traders easily and find out where other traders find their expert insight. As a new trader these forums are a good place to start looking for currencies that will be trending. You will find threads and posts about upcoming trends in the market that you should look out for. Of course, once you have the tips and hints from the forum you have to conduct your own analysis. You should view the forum as a starting point for finding your profitable trend.
Technical Analysis Tools
After you have identified a possible trend you should use technical analysis tools to verify the trend and when you should enter. A lot of trend traders use MACD histograms to verify trends. The MACD histogram not only verifies that there is a trend but it also gives an indication regarding the strength of the trend. Trend strength is very important to herd instinct trading because you only want to trade on trend that will be prolonged and have a strong movement.
Traders should also look into using Bollinger Bands and moving averages to find their entry and exit points. There are some traders that use RSI levels to determine entry and exit. It is best that you find a tool that you are comfortable with and able to easily use.
While herd instinct trading is based more on technical analysis than fundamental analysis you should not neglect the fundamentals. You have to be aware of any high impact events and news that could affect the market. While the forex market has been known to defy fundamentals there are times when fundamental events cause the trends you are profiting from.
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