Supplemental Forex Trades
With the Forexearlywarning trading system you can make forex trades two ways. One way to make trades according to our trading plans in the direction of the trends of the market on the higher time frames. Another way is supplemental trades. A supplemental trade is some strong movements that may occur week to week due to unexpected movements, unexpected news or market sentiment creating an opportunity or new breakout that might not have been visible on the charts.
Supplemental trades occur almost every week. They might be short term trades or unexpected movements that develop into strong trends. The Forex Heatmap® can sometime point you in the direction of good market movement on non-trending pairs that eventually develops into a strong trend. Since we follow 8 currencies and 28 pairs these types of trades are common.
What Is A Supplemental Forex Trade?
A supplemental forex trade may not necessarily be a strict trend trade in the direction of the major trends. Sometimes pairs move against the major trends for a few days, or sometimes a pair may not be trending at all, then it breaks out of a range. Supplemental forex trades are strictly based on current market sentiment, central bank news, worldwide equity, debt and commodity markets, expected or unexpected news announcements, unexpected breakouts, etc. or unexpected outcome of regularly scheduled news on the calendar.
The overall design of our trading system is for trend trading on the higher time frames, but we understand that shorter term opportunities may develop on a day-to-day basis. The Forexearlywarning trading system is flexible enough to deal with changing trading market conditions and different forex trading styles. Supplemental forex trades are a unique trading style. Supplemental trades occur because the overall trend analysis does not indicate any consistent strength or weakness in one currency group, and some of these pairs have unexpected strong movements.
Groups of pairs that are trending can start to consolidate, retrace, have reversals, or unexpected news. Non trending pairs can start to breakout then start trending. For example, the analysis of the USD pairs indicates mostly sideways movements, then, the next day in the main session, one of the USD pairs breaks out strong in one direction. This is an example of a supplemental trade.
Compare and Contrast These Situations
Here is an example of a straight forward trend trade, then an example of a supplemental forex trade so traders can see the difference:
Situation Number 1– all of the JPY pairs are trending higher on the D1 time frame, and all of our trading plans indicate JPY weakness and buy plans for these pairs. The price alerts start to hit in the main session and the JPY is weak on the heatmap. All of the trends follow though and continue higher with strong upward movements and buy entries. Very straightforward trend trading with our system. This is a fairly conservative style.
Situation Number 2 – Some of the JPY pairs look like they are trending up, some of the JPY pairs look like they are trending down, and some of the JPY pairs trend indicators are mixed or slightly choppy, so the overall assessment of the JPY pairs is non directional.
The next day in the main trading session, one of the JPY pairs breaks out of resistance or clusters and the JPY is weak with strong signals on The Forex Heatmap®. This is a supplemental trade. The trend analysis did not indicate any up trends, but due to some unexpected news or change in momentum, the JPY pairs started to take a new direction. So the JPY pairs go from consolidating to trending in the span of 1-2 trading sessions. But our trading system caught the first breakouts. These might turn into trends that you could ride for several days. So this is an excellent possibility for any trader.
Risk and Reward of Supplemental Trades
It varies from trade to trade. A supplemental trade might be a trade that yields a small amouny of pips due to the pair being in a tight range. But sometimes unexpected breakouts occur and a supplemental trade can have very high rewards if a new trend forms on the higher time frames after the breakout.
If the Forex Heatmap® identifies a potential supplemental trade but the end user does not understand support or resistance, clusters, or breakouts, then the risks are higher. But if a trader sees a supplemental trade and has a full grasp of what is happening, then supplemental forex trades can add a lot of pips to your weekly and monthly pip totals.
The Forex Heatmap® is an entry management tool, it tells you what is happening in the market and what pairs to potentially trade, but it does not know what currency pairs are trending or how to analyze time frames, support and resistance, or the outcome of news. That is all in your hands with the help of our documentation and trading plans. Our daily trading plans will assist greatly with understanding our system and are a very important piece of the puzzle. Traders always need to know what pairs are trending when using our system.
How Traders Can Locate Supplemental Trades
If a currency pair is moving sideways and not trending, it will likely not be included in our daily trading plans. But our trading system has a suite of professional forex alert systems to identify price movement. So if price alerts go off, or you start getting alerts on non tending pairs, their might be a supplemental trades available for you to look at. If pairs start moving you will know this with our alert systems. Most or all supplemental trades can be located by our great alert systems, mobile alert systems and desktop tools.
Conclusions About Supplemental Forex Trades - The Forexearlywarning trading system and trading plans are designed for trading in the direction of the major trends and higher time frames. We understand that sometimes unplanned movements can occur, like strong movements against the trend, range breakouts of non trending pairs, and unexpected news. We call these supplemental trades. Our trading system, tools and alert systems are flexible enough to identify these trades and give traders ways to take advantage of these movements and to make more pips, over and above the published trading plans.