Price momentum, or the assumption that rising prices will continue to increase and declining prices will continue to decline, is the basis for filter law. A percentage increase triggers a purchase, while a percentage decrease triggers a sale. A dealer, on the other hand, may choose to do the very opposite. Since the percentage amount chosen is focused on the analysts' understanding of a stock's trading background, it is a discretionary technique.

A forex filter is any type of standards used to decide the financial vehicle that is best appropriate for the investment objective of a particular trading style. There are a considerable amount of forex filters that works in various ways. You should simply track down the one that works for yourself and apply it to your trades.

The forex filter is a set of rules that define the types of trades that a trader can make. If a trader has a forex filter, they will only be able to trade in those markets which meet these conditions. These filters can be as simple as limiting your trading to one type of currency pair or as complex as only executing trades when the market is moving in a certain direction.