How often have you had what you thought was the perfect set up for a trade, you entered, and nothing happened? Maybe it was 9PM on the east coast and your thinking was that you could make your 10 pips for the evening and be in bed by 11PM; $100, $1000, etc. richer. But at 10:30PM nothing had happened other than price had gone up and down around your entry no more than two or three pips. You decide to wait till 11:00 and then exit wherever the price was at that moment, profit or loss. Sometimes 15 minutes goes by before there is a single pip move on the chart. You would go get a cup of coffee but you are sure as soon as you leave the currency pair will start moving in your direction.

At 10:55PM there is a move of price but it is in the wrong direction. You are roughly 8 to 9 pips in-the-hole. This is not where you planned to be at bedtime. You have a big day in the morning. You wish you had not entered. What happened?

Typically it is difficult to trade in the Asian session because the largest number of large companies, institutions, countries, are not trading Forex. Who is trading? Less than the 2% of traders who are considered retail traders around the world. There is no demand for anything in the market at this time of day, no momentum.

Let’s define momentum as, The current price action, what price is doing right now. In the Asian session there is little momentum. Since I began my study of RSI, the Relative Strength Index about 3 years ago I began to get an understanding of momentum and how important it was to trading Forex. You can have the greatest trading system and the greatest signal but if you don’t have momentum when you place your trade you have nothing.

About the time I began to develop my idea of 3 kinds of momentum in the market, I read an interview with Michael Marcus on how his most successful trading technique had been trading with tight stops at projected “high” momentum points. This allowed him to have large position sizes. If there was no momentum then he got out. Michael Marcus is considered one of the all-time top currencies traders in the history of foreign currency trading. The interview is in Market Wizards, by Jack Schwager, a trading classic. I found that this was exactly in line with the 3 kinds of momentum I had identified for my system, two of which can be located on RSI.

Googling RSI and momentum will probably get you wrong answers unless you happen to come across another article on momentum where I have expanded on this theme or end up at my website where you can learn about it by reading one of my eBooks.

There is much to learn about RSI and the power it has to signal trades. One of the most important aspects is finding key momentum points. A good place to start is with what I call RSI PRO: The Core Principles. By visiting my website you can learn more by downloading a free eBook on Forex, signing up for my daily newsletter on the RSI method of trading and reading RSI PRO: The Core Principles.

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