Before you go to battle, you should know your enemy. Ideally, you would also know where that enemy is going and how it plans to get there. If so, you can get there first, set up fortifications, and prepare for your enemy’s arrival ... and doom.
You can’t set a trap for price if you are following and reacting to the market. You need to plan and maneuver ahead of the action.
As a reminder, according to the Art of War
, the first thing a general must do is gather intelligence. In forex trading, the first thing you need to do is define two things:
1. Speed of the market.
2. Momentum of price.
Please note there is a difference between marketspeed and price momentum.
• Speed is how the market is moving.
• Momentum is where price is going.