March 12, 2008
GBP/USD Continues To Surge Higher
The GBP/USD again demonstrated today why the best forex trading method is often to simply follow the trend. Sure you can make money from determining overbought and oversold positions and trying to catch reversals, but following the trend is so much easier.
Take this morning, for example. The GBP/USD pair was clearly still in a strong uptrend on both the daily and the 4-hour charts so I was still only interested in going long, and was presented with a golden opportunity to do so.
The fact that the EMA (5) briefly crossed downwards through the EMA (20) yesterday on the 4-hour chart but quickly crossed upwards again today was a very bullish sign and I subsequently waited for a slight retracement before getting in at 2.0122.
Despite dipping slightly, this turned out to be a profitable trade and I subsequently closed half the position at +100 and let the other half run (I closed it a few minutes ago at 2.0268).
Anyway the point I want to get across is that forex trading can be fairly simple at times. If there's a clear trend in one direction across different time frames (as has been the case with the GBP/USD in the last week or so), then you should only be thinking about taking a position in the direction of this trend and your only concern should be choosing your entry point.
For more forex tips and strategies, including full details of my main 4 hour trading strategy, simply sign up to my newsletter by filling in the short form above.