Stock index futures like the Dow Futures or the S&P 500 Futures are traded for speculation as well as hedging purposes. Stock-index futures are by far the largest category of futures contracts traded as a percentage of the total number of futures contracts traded. The dominance of index futures clearly speaks of the major role that stock-index futures play in risk management for the entire stock market.
When you have identified the triangle formation on either the daily or weekly chart, get ready for a breakout. Each triangle type has its own directional bias. When you trade triangle breakouts, ignore any first breakout attempts whether it is to the upside or the downside. There can be three possibilities when you try to trade the decreased volatility breakout strategy.
Third Stage-Aging Trend: Aging trend is the period of consolidation as the trend comes to maturity. This is the period where lot of profit taking will take place. As the momentum of the trend exhausts itself, volatility tends to decrease at this stage of the trend.
Without understanding the crowd psychology, you cannot become a successful trader. Always try to understand the crowd psychology. Trading breakouts is one of the most popular ways of making pips from the forex market. Decreased volatility breakout is one of the subsets of breakout trading. While this strategy is similar to the strategy of trading breakouts, but it is specific to a certain conditions in the forex market. With this strategy, you try to take advantage of periods of low volatility in the forex market.
Greed is a form of fear which is the fear of missing out. So you need to control and face your fears in trading. The first step in overcoming fear is to recognize the various forms of fear connected with trading. The second step is knowing how to control those fears.
Can you control your emotions? Can you behave like a robot? Certainly not! Human beings are emotional creatures. Our mind is capable of playing emotional tricks on us. It is often said that we are our own worst enemy. In forex trading, this is the ultimate truth. Most of our trading decisions are guided more by emotional than logical thinking.
A stop-limit order is basically an order that becomes a limit order once the currency reaches the designated stop price. Only when the specified stop price has been reached, the stop-limit order will instruct the broker to buy or sell at the specific price. At the specific price the stop-limit order becomes a limit order.