Tuesday morning and if ever you needed proof that we live in a symbolic world then yesterday was it. Forex trading online is just numbers moving in pairs that represent the money of the world’s biggest countries like the USA. There is a huge shortage of those two symbolic emotions that keep the forex trading system on an even keel; confidence and trust.

At 17.45 gmt the GBPUSD cable moved by 113 pips because the US house of representatives failed to ratify the Federal Reserve’s economic rescue plan. So currency trading cables will be volatile moving up and down and money can be made and lost.

In the long term the US are far more proactive in the markets than their British and Euro counterparts. It is a good bet that the US economy will recover earlier than the UK or the Eurozone. Hence the Dollar continues to be positive. In the very short term like yesterday at 17.45 extreme cable movements are signals to trade.

So what is your forex trading strategy in these interesting times? Look for the first candle bar to be wholly inside the preceding one. Yesterday, for the GBPUSD cable it was the very next one at 17.50 which had a high of 1.8121 and a low of 1.8069. These then are the trading points. You should buy at the upper one and sell at the lower one. Limit losses with 25 pips.

I call these ‘whiplash’ moves because they look like a waves moving along a whip when it is snapped. The only question is whether it is upward or downward and the inside candle limits are a good indicator of this. If you lose your 25 pips then trade in the opposite direction and take profit after about 4 hours. This is the normal length of time it takes for the whiplash to peter out.