And the market is closed right now because it is Friday and the weekend has started. Those gains have been fundamentally based in the man. You can see that the price attempts to break with the level of resistance, then because of buyers taking profit and sellers coming into the market, price goes down.
38.2% retracement the next hurdle
This means that you must carefully study and analyze your own financial goals in engaging forex trading. Once you know what you want from trading, you must systematically define a timeframe and a working plan for your trading career. What constitutes failure, what would be defined as success? What is the timeframe for the trial and error process that will inevitably be an important part of your learning?
How much time can you devote to trading? Do you aim at financial independence, or merely aim to generate extra income?
These and similar questions must be answered before you can gain the clear vision necessary for a persistent and patient approach to trading. While this point is often neglected by beginners, it is impossible to overemphasise the importance of the choice of broker.
That a fake or unreliable broker invalidates all the gains acquired through hard work and study is obvious. But it is equally important that your expertise level, and trading goals match the details of the offer made by the broker. What kind of client profile does the forex broker aim at reaching? Does the trading software suit your expectations? How efficient is customer service?
All these must be carefully scrutinised before even beginning to consider the intricacies of trading itself. In continuation of the above item, it is necessary that we choose the account package that is most suited to our expectations and knowledge level. The various types of accounts offered by brokers can be confusing at first, but the general rule is that lower leverage is better.
If you have a good understanding of leverage and trading in general, you can be satisfied with a standard account. In general, the lower your risk, the higher your chances, so make your choices in the most conservative way possible, especially at the beginning of your career. One of the best tips for trading forex is to begin with small sums, and low leverage, while adding up to your account as it generates profits.
There is no justification to the idea that a larger account will allow greater profits. If you can increase the size of your account through your trading choices, perfect. The world of currency trading is deep and complicated, due to the chaotic nature of the markets, and the diverse characters and purposes of market participants.
It is hard to master all the different kinds of financial activity that goes on in this world, so it is a great idea to restrict our trading activity to a currency pair which we understand, and with which we are familiar. Beginning with the trading of the currency of your nation can be a great idea. Simple as it is, failure to abide by this principle has been the doom of countless traders.
Do not trade on the basis of hearsay or rumors. While this is just common sense, ignorance of the principle, or carelessness in its employment has caused disasters to many traders in the course of history. Nobody knows where a currency pair will be heading during the next few hours, days, or even weeks.
There are lots of educated guesses, but no knowledge of where the price will be a short while later. Thus, the only certain value about trading is now.
Nothing much can be said about the future. Consequently, there can be no point in adding to a losing position, unless you love gambling.
A position in the red can be allowed to survive on its own in accordance with the initial plan, but adding to it can never be an advisable practice. Yet traders are human beings, so it is obvious that we have to find a way of living with these emotions, while at the same time controlling them and minimizing their effect on our lives. That is why traders are always advised to begin with small amounts. By reducing our risk, we can be calm enough to realize our long term goals, reducing the impact of emotions on our trading choices.
A logical approach, and less emotional intensity are the best forex trading tips necessary to a successful career. An analytical approach to trading does not begin at the fundamental and technical analysis of price trends, or the formulation of trading strategies.
It begins at the first step taken into the career, with the first dollar placed in an open position, and the first mistakes in calculation and trading methods. The successful trader will keep a diary, a journal of his trading activity where he carefully scrutinizes his mistakes and successes to find out what works and what does not.
This is one of the most importance forex trading tips that you will get from a good mentor. We already noted the importance of emotional control in ensuring a successful and profitable career. In order to minimize the role of emotions, one of the best of courses of action would be the automatization of trading choices and trader behavior. This is not about using forex robots, or buying expensive technical strategies. All that you need to do is to make sure that your responses to similar situations and trading scenarios are themselves similar in nature.
Let your reactions to market events follow a studied and tested pattern. Surprisingly, these unproven and untested products are extremely popular these days, generating great profits for their sellers, but little in the way of gains for their excited and hopeful buyers. The logical defense against such magical items is in fact easy.
If the genius creators of these tools are so smart, let them become millionaires with the benefit of their inventions. If they have no interest in doing as much, you should have no interest in their creations either. Forex trading is not rocket science. There is no expectation that you be a mathematical genius, or an economics professor to acquire wealth in currency trading.
Now, these methods are very strong on an intra-day basis, and up until now we are talking about strategies that work better on a higher time-frame.
Well, you can find an M-top at the end of the corrected move or you can find a W-bottom at the end of the down-move at very strong either support, or resistance levels and then you will have a very strong immediate countertrend trading pattern or setup. Well, M-tops and W-bottoms are the most trusted intra-day trading techniques. Unlike double- or triple-tops and bottoms, M-tops and W-bottoms appear on a daily basis on the lower timeframe chart.
And if you are looking at a double top or a possible double top, for example, on the higher timeframes, it might take a week for it to form and it might not break at all. But with W-bottoms and M-tops, you are going to have very fast setups on an intra-day basis that are going to get you to your targets very fast. What we aim to teach, is to use the setups on a daily basis on the lower timeframes or the one-hour and minute charts.
And, of course if you are scalping the markets you can use them on the five-minute charts, the one-minute charts, et cetera. But these patterns, or any pattern at all, is very strong. If you are trying to scalp the market, well, that is a completely different animal, and you will learn it at scalping and day-trading course.
In an auction, for example, buyers try to break with a level of resistance, only to be pushed back by sellers. If the second attempt to break is shallower and then the sellers take control of the market, rolling it over. This means that this zone where buyers were met, was also the zone where sellers were taking profit which means that, on top of the buying pressure, we have sellers giving up on this market and price is going to come up. Now when price comes up, a new batch of sellers is going to come into the market trying to push price to break with this area of support.
And when we break with this high, which is the neck line, we have the setup for us to go long and in this case, if from the lowest points to the neckline, we have 27 pips, we are going to have a pip target. And the same goes for an M-top. You can see that the price attempts to break with the level of resistance, then because of buyers taking profit and sellers coming into the market, price goes down. And the market is closed right now because it is Friday and the weekend has started.
Because we are in a down move, we are going to try to spot a W-bottom pattern. And the first one that I can spot is right here. Let me just thicken this chart for you as I always do because I like to have my charts visually attractive.