Forex Investing
Sometimes it is very wise not to be the early bird when you are investing in forex. You can instead wait and see what the day will bring and you can think before you take action. You can use the 10 A.M. rule which is a great example of this concept.
This is an example which can protect your capital. For example, if you say you want to buy a forex investing stock, a trend play, or a market rally which you think is presently a hot sector, you will participate in that. You know that there will be a great time to buy. You would be on a gap down, however, the market is in rally mode and instead of gapping down, the forex stock gaps up but buying the gap up is a bad trade and in such a situation what do you do.
You use the 10 A.M. rule. You then wait until after 10 A.M. for the right forex stock investing time for buying the stock. If the forex stock makes a new high for the day and that too after 10 A.M., then, and only then, should you trade the stock and of course, you can use stops to protect yourself. Anyone who has followed the market knows that a forex investing stock will often gap up during morning. This is only to suddenly sell off and reverse into negative territory and by following the 10 A.M. rule; you can and will avoid the risk of this sudden reversal. If the forex stock does make it to a new high after 10 A.M., you still have a trader interest in the forex stock. It then stands a good chance of gaining momentum and heading even higher.
Here is an instance of the 10 A.M. rule on a gap up. A forex investing stock closes the day at $145 and after many hours, the company announces a two for one forex stock split and the next morning the forex stocks gaps up to open at $161. Then the stock trades as high as $166 before 10 A.M and for two hours after 10 A.M. it trades lower and doesn*t reach $166. During 2 P.M., it hits $166.50 and the forex stock is now safe to buy, using the 10 A.M. rule.
By using the version of the 10 A.M. rule, you can watch for a hot sector to appear in the morning. You can then follow the forex stocks in the sector that are up for the day. If the forex stocks are still making new highs during midday, such stocks stand a good chance of finishing the day. This is near their ultimate highs for the day and there could be some good trading opportunities. This also applies in a down market. This also applies to stocks in forex that gap down which are opening at prices lower than where they closed the previous day. In such a kind of situation, you should not short a forex stock that has gapped down. This is unless and until it makes a new low for the day after 10 A.M.
Using the 10 A.M. rule, you can be assured that you will never end up chasing and buying a forex stock. This is when your chances of making a profitable trade are low and you must remember that trading is all about probabilities. The more forex stock investing trades you make which has a high probability of success, the more successful you will be. The 10 A.M. rule is a very valuable addition to your trading plan. It also gives you a straightforward way to avoid making costly mistakes and to increase your number of profitable stock investing trades in forex.
For those people who are unfamiliar with the term, FOREX, this refers to an international exchange market. This is a place where currencies are bought and sold and the Foreign Exchange Market began in the 1970's. This was the time when free exchange rates and floating currencies were introduced. In such an environment, only participants in the market used to determine the price of one currency against another. This was purely based upon supply and demand for that currency. FOREX is a unique market for many reasons and this is because it is one of the few markets in which it can be said with very few qualifications. It is free of external controls and that it cannot be manipulated and also. Another unique characteristic of forex investing is that money market is the variance of its participants. There are investors who find a number of reasons for entering the market. Some of them are longer term hedge investors and some others utilize massive credit lines for getting large short term gains.
Forex is a unique market for many number of reasons. One of the reasons is it is one of the few markets in which it can be said with very few qualifications. It is free of external controls and that it cannot be manipulated.
Other Articles
