After analyzing virtually every aspect you should take into consideration when trading Forex, let us find out one to one various operational strategies that are frequently used by many traders in the market.
The first of these is the famous double zero strategy, whose central element of his conception those areas in which the price is in round numbers or whose termination ends with a double zero (1.1200, for instance).
These prices are universally recognized as psychological levels, representing a similar or even greater opportunity, any other support or resistance that the structure can suggest market. Somehow, areas with double zeros usually present a major order activity in the market, and that can be properly harnessed to a strategy designed for it.
It is also true that this strategy is fundamentally intraday, because their aim is to take advantage of price reactions passed through a very specific area, and generally, the movements that a trader can leverage will in most cases short-term movements.
How the strategy works double zero
The main idea of this strategy is to expect a significant rebound in the major trend of the price to reach this level of double zero, no more complicated than that. Since in these areas, as mentioned, there will be increased order activity, it is advisable to work with a stop loss loose enough to avoid running out of a losing trade market for any impulsive market movement.
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Furthermore, if it turns out that in the double zero converge other indicators or strategy favoring taking the position that the double zero strategy determines the odds of success increase considerably. As the same way the area is more relevant if we talk about triple or quadruple zeros (1.1000 or 1.0000).
In the graphic example, we can see how the EURUSD approached in a clear uptrend 1.0900 area, which actually bounced off the major trend move lower to 1.0875 or so. Which is a movement of 25 pips, when the price went just ascending (contrary to our position following the strategy of double zero) about 12 pips?
Therefore, a ratio benefit / risk something greater than 2 (gain 25 with a risk assumed 12) would have been considered a good operation EURUSD advantage arrival to psychological double zero area located at 1.0900.
The areas of double zero should also be taken into account when considering our collection areas of partial or total benefits , since in the case of being in a winning trade will not be suitable exposure to a movement against our operation.