The Foreign Exchange Rate Morning Fake Out
As the forex market is a 24 hour market many trader do not consider that there is a morning fake out. These morning fake outs are considered to be something that you find on market with opening and closing times. While you can find this with these markets there are also morning fake ours with the foreign exchange rate market. You simply have to know what to look for and when to look for it.
When Is Morning on a 24 Hour Market?
The question that most new traders have with this morning fake out is when the morning is. The 24 hour nature of the forex market makes many traders believe that there are no mornings. This is incorrect because there are a number of market sessions that you have to look for. The morning fake out on the forex market will take place when these market sessions begin. There are certain market openings that you have to pay attention to and others that do not lend themselves to this kind of trading.
What to Look For
When you look at trading the fake out you have to know what to look for. The currency pairs you should be looking at are the most liquid ones because they are the best for this kind of trading. These pairs have patterns that they follow which make it easy to identify the fake out.
One of the best market session opens to look at is the European session. The currencies that are often traded in this session may not be traded much in other sessions. The currency pairs you should pay attention to include the GBP/USD and the EUR/USD. There are several pair that you have to consider and many pairs that you should not consider at all.
The market conditions you are looking for have to be stable and trading within a set range. The range you are looking for should be small and very stable. If you cannot find this with the currency pair you are looking at try a different one. For each market open there will be a number of pairs that you can trade.
Potential Foreign Exchange Rate Issues
When you look at any trading strategy you have to consider the possible problems and issues that you could face. There are a number of issues that some traders find with this kind of trading:
- Not all the signals that you use for this trading will come in the opening of the market. You may find a signal for fake out an hour or two into the session. If this is the case then the exit point will also be much later.
- There are often multiple entry and exit points for this kind of trade. You should never enter more than two trades for s single direction on a single currency pair.
- When you look for engulfing patterns you should allow it to be off by a few pips. This is something that you generally do not allow with other trading strategies, but is effective with this kind of trading.