Forex Entry Signal -In Search Of A Holy Grail?

Identifying forex entry signal could be as hard as identifying restrooms in Bangkok Airport.

Let me tell you how hard it could become.

One time I was at Bangkok airport, I needed to use restroom but I couldn't identify it even though I was standing directly infront of it.

Unlike in the U.S. where restrooms are labeled "Men" and "Women", restrooms in Bangkok airport are labeled "Romeo" and "Juliet". Their label choice seems romanticly obvious yet dubious particularly if you haven't read Shakespeare's Romeo and Juliet.

If a trader has found consistent high probable forex entry signal then it could be not by a chance but as the culmination of hours of price action study.

The old saga: Buy Low Sell High sounds pretty easy concept to grasp but the most challenging part is implementing this concept into practice.

When can I precisely know the market has bottomed out and ready to head up north so I can buy?

And when can I precisely forecast the market is teetering on the brink of collapse so I can sell?

In quest of answer to find an "ideal" forex entry signal traders could follow either approach viz:

  • Fundamental Approach

  • Technical Approach

  • Fundamental-Technical Approach

Fundamental Approach

Institutional forex investors such as hedge fund managers, private money managers, banks primarily stick with this fundamental approach in identifying forex entry signal. Retail traders most often seem to discount this approach primarily because fundamental approach is data intensive.

When I started trading some five years ago, I was primarily taught to be a technical trader. I heavily relied on candlestick charts and pattern formations for my forex entry signal.

I was in a supposition that candlestick charts bring about price fluctuation. I knew little to nothing how economic, political and social factors of a particular nation is tied in sync with its currency causing it to appreciate and depreciate.

It was not until I devoted my time and energy to learn every nitty-gritty behind the fundamental that I could see the forex market in a whole new approach.

First thing first, if you have this similar superstition that candlestick charts move the forex market, accept the fact there is more to the candlestick chart patterns.

That was a bit digression from our main topic how to determine forex entry signal using fundamental approach but I had to root out the superposition that many traders are living by.

All right back to business...The key to determine an entry point using fundamental approach would be to watch the key economic indicators.

Let be more specific.

In my EUR/USD trading experience, I closely monitor key economic data indicators viz:

  • Employment-Nonfarm Payrolls (U.S.)

  • Interest rate decision (both U.S. and Euro zone)

  • Trad Balance

  • Inflaction (Consumer Price Index)

  • Retail Sales

  • Current Account

  • Gross Domestic Product (GDP)

You might ask what is the point of watching this figures...ehh?

The bottom line is this: watching these figures I want to determine when and by how much will FOMC or ECB will likely hike its interest rate because one thing that moves this market is interest rate differential between two currency pairs.

Learn more on how to profit from forex interest rate rise.

This approach of entering the market will be often for long term purpose.

However you could take the facts and figures from fundamental to technical analysis to find and entry point using technical analysis.

Here I've to make a legitimate confession. Almost all traders are in constant search of that holy grail of indicator which can signal an "ideal" entry and exit points.

I fantasize about it too.

But we live in a real world full of chaos and not in fantasy world.To be precise we live in an organized orderly chaos world.

So out of thousands of indicators that are available and labeled to be the best in determining forex entry points, every trader has to find couple few that they can feel comfortable about using it to identifying their best entry points.

See.....I can educate all and everyone about my knowledge on entry points but as for the has to find with one's own experience...with one's own sweat and tear and there is no other substitution for it.

Hope this rings the bell....or turns light on.....

Think you found the holy grail? Share your story, tip or review about how do you identify the right forex entry singal below.