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Using RVI on Recent EUR/USD Moves

As any short term trader knows, using technical indicators is a must if you want to be successful. There are other considerations that you want to take into account, though, but in the end, the thing that triggers a trade should rely on technical information. When trading the EUR/USD over the coming week, know that while the market is pulling the asset upward in price, each individual entry and exit point, or beginning point and expiry if you are focusing on binary options, should be determined by the technical data that you have at hand.

The euro is being buoyed right now because of a weakening U.S. dollar. Over the past month, the pair has risen from about 1.1366 to 1.1406. During that time, the price spiked up above 1.155 for a brief time. However, weak economic data coming from the U.S. is likely to keep the dollar weak, and this means that although the price has dropped over the past couple weeks since hitting that high point, the euro is still stronger than the dollar, and your trades should take this into account.

Using a relative vigor index approach allows for easy trade setup in many cases, assuming that you have a strong charting software package. This trading principle relies on the fact that in a bull market opening prices tend to be lower than closing prices, and that in a bear market, opening prices tend to be higher than closing prices. By incorporating this into your trading, you can get a foothold on how you should approach the beginning of each trading session. As U.S. traders relax and regroup over the weekend, they can setup Monday mornings far more easily with this knowledge. As trading sessions transition from Asia to Europe to the U.S., you will need to look at what’s happening with each in order to fine tune your approach, of course, but the basic principle is right far more often than it is incorrect. When you use a strong piece of charting software, such as MetaTrader 4, you can use charts to create buy and sell signals for you with this RVI strategy. If you are using binary options, you just need to select the right expiry before you begin. The easiest way to do this is to look at the timeframes on the charts you are using and adjust accordingly. A 5 minute chart should use something 5 minutes or slightly longer for expiry, for example.

With this information in mind, we look at Friday’s closing price of 1.1406, see that the market is currently bullish in favor of the euro, and can presume that when U.S. markets open early on Monday, that the EUR/USD is likely to be a bit lower, barring anything unforeseen out of Asia or Europe. With the Fed data that was released Thursday, and driving the asset up on Friday, this might not be the case, but on a normal weekend, this is the correct way to think about the trades you will make.

Binary options brokers tend to offer higher rates of return on currency pairs, and most specifically, they offer better rates for the EUR/USD thanks to the fact that it is the world’s most highly traded pair. A lot of Forex traders have moved to binary options, and they keep rates high here thanks to the fact that this helps convert traffic for them. If you have a strong grasp of how to trade this pair, you can use this to your advantage and create large profits in a short amount of time, without focusing on the large risk that leverage can have on your account size.