2 Types of Forex traders

When using ENTRY techniques you should be aware of the 2 types of traders that are always present in the market.

The retracement trader: This trader believes that the market does not like excessive wild trends or movements. They believe that the market moves in bands where the price will bounce up and down back to the middle of the main movement of the price action, even when in a trend. This group are likely to trade against the short term trends.

They will continuously trade back into the price action. In this section we will refer to these traders as “BOUNCE TRADERS”.

The breakout / Trend trader: This trader believes that the market is more inclined to trend and will trade breakouts out of consolidations and price patterns that start a trend.

This group will often trade breakouts when the price is breaking out of support or resistance and believe that the trend will continue indefinitely until signals of trend exhaustion are experienced. They will continuously trade away from price action. In this module we will refer to these traders as “BREAKOUT TRADERS".

The 2 groups are often making ENTRY decisions at the same price levels. This often results in trading battles between the types of traders with the victor being the one with the most orders backing their direction or the most staying power. In the example below, bounce traders will buy because they believe that price will bounce on a horizontal support and resistance, a trendline and a Fibonacci level.

Breakout traders will sell because they believe that price will break through a horizontal support and resistance, a trendline and a Fibonacci level.

This also explains why ENTRY techniques are not 100% reliable. Good traders know that Forex trading is like a war consisting of many small battles (trading transactions) and it is more important to win the war in the long run than winning every single battle. Newer traders see each transaction as a war and are devastated if a single loss is made and take the loss as a personal failure.

So it important to have most of your orders on the side of the team that is most likely to win most battles and the overall war in the end.

Bounce traders and breakout traders should not be confused the Bulls and the Bears. Bull traders always want the price to go up and Bears traders always want the price to go down.

Index Sections:

1. ENTRY Techniques for breakouts and Bounces

2.. ENTRY Techniques for trend and trend continuation trades

3. ENTRY Techniques using Momentum

4. ENTRY Techniques using Horizontal support and resistance

5. ENTRY Techniques using non Horizontal support and resistance

6. ENTRY Techniques using mathematically calculated ENTRY points

7. ENTRY Techniques based on Specific Market behaviour