Is reversal trading in forex for you – or is trend trading the best option?

In the London forex session, the focus was on reversals and reversal trading, and whether this suits your temperament and personality as a trader. The forex market is one of mean reversion, with currencies moving from oversold to overbought and back again in all timeframes. This presents a myriad of trading opportunities using the currency strength indicator for MT5, NinjaTrader and TradingView.

But the question is whether this is for you. The advantage of reversal trading is as a trader you get in early and so maximize returns on the position. However, getting in early comes at a price, which is the need to have a wider stop loss as it’s not a question of if the market will reverse but when. And in waiting for the reversal to occur, requires patience and risk management as currencies can remain overbought or oversold for longer than you think. So the key is whether this style of trading suits your personality. If it does, that’s great. The alternative is to wait for any breakaway or breakout and join any trend once underway. Any stop loss can be much tighter as a trend will have momentum, but the rewards are potentially lower also, since entering a trend once underway means some of the move has already occurred.

As always in trading, risk and reward go hand in hand. Higher risk for higher returns and lower risk for lower returns. Watch the video and discover whether reversal trading is for you in this live session using volume price analysis and the Quantum Trading tools and indicators.

Check out the trading indicators and currency strength indicator for MT4/5, NinjaTrader and TradingView at https://quantumtrading.com