By Chris Donnell
How can you improve your forex system with filters? You might be looking for a way to improve your successes. You might want to get in on trends in trading. What are some ways to identify the ideal time to join in? See examples about this article and our Forex Systems on our Forex Blog site. How can you tell if the popular trend is moving in a direction that you like?
Experienced traders know that nothing is guaranteed but filters can help. Just as carbon filters help eliminate pollutants from kitchen sinks, leaving you with clean water, you can use filters when trading.
Moving averages and balance point line are two crucial filters found in Top Gun forex training. Here is a simple overview of how to use these filters. These filters are most successful when used concurrently with trading rules. Trading rules will be explained in a different article. Filters may also be more effective when used with multiple time frame analysis.
The Top Gun forex course discusses its trademark balance point line. You can find a short discussion of the balance point line in the second part of the Support and Resistance article. The balance point line follows the following guidelines: above the line, search for possible trades to buy; when below the line, search for possible sells. Of course, this is a very simplified explanation, and you will also want to look at multiple time frames (which will be discussed in another articles), as well as look at trending tools which can be crucial to your success. You should combine the balance point line with additional trading methods.
Another filter method is moving averages, these are common among forex software programs. Some typical moving averages are: the 20 period hourly average as well as the 10, 20, 50, and 200 day moving averages. What would the strategy be? One kind of strategy is if the price is higher than the previously named averages, then you should search for buys. Of course, there are other ways to use moving averages, but this method is the easiest.
Here is another Top Gun forex strategy filtering method. Pay attention to lows and highs. So, if a price goes higher than monthly, weekly, or daily filters, then you will want to search for buys. Sure, you might want to review other tools, this is only a quick and easy overview.
To sum up, the balance point line, highs and lows, and moving averages, are all essential techniques in the Top Gun forex training program. Additional articles will discuss how to identify resistance and support, how to develop trading plans, and how to create rules for trading.
This article is in no way meant to be investment advice. It is merely for educational purposes and to help you think in new ways about trading.
About the Author
Chris Donnell is a professional trader. See many examples of his tools, systems, and trades on his ForexBlogFX.com site.
