The majority of traders seem obsessed with carving out a flawless trading method, often mistakenly overlooking the significance of money management.Whilst it is strongly agreed that a well-rounded trading strategy is vital to success, money management can also be your silent ally. Working quietly behind the scenes, the applied...
Have you ever pulled the plug on a trade, only to see it cover 200+ pips in the next few hours? I have, and it's not a nice feeling. Vice versa: have you ever held onto a losing trade, thinking that the market had to turn around sooner or later? Again, I've done that. I've widened my stop loss, exposing more of my capital to the market. These are direct violations of the one rule that we simply cannot ignore: cut losses quickly and let winners ride as long as (logically) possible.
"Risky" means that, like other endeavours in life, you need to plan ahead in order to manage the inherent uncertainty of the markets, and make sure that your risk capital (which, after all, is what allows you to stay in the game) is never depleted. Notional funding, proper position sizing, and discipline are key to this part of the equation.
Swing Trading is a mid term trading strategy often utilised by FX and CFD traders. Swing Trading positions may be kept open for just a few hours, but Swing Traders can also choose to keep a trade open for much longer, under the right market conditions.
Catching big reversals is something that many new traders day-dream about but rarely ever succeed in doing. However, the 5-0 pattern offers traders the opportunity to catch these types of market moves by finding a unique entry point.
Support and resistance levels or supply and demand levels are the backbones of technical trading. Regardless of the type of technical analysis methods used, be it an indicator based trading system or a price action based trading system, support and resistance levels plays a crucial role.
Scalping is an area of Forex trading that always appeals to new traders because of the potential to make big profits, quickly. However, with the high level of reward also comes a high level of risk, so it is super important that you take the time to properly understand scalping before applying it to live markets. As ever we are going to take things slow and steady and make sure that we cover everything so that you are really comfortable.
Like most indicators, it is very easy to apply on the price chart - you simply drag it onto the prices. Its interpretation is also fairly straightforward; buy above or sell below the moving average line. It's no wonder that so many technical traders, even fundamentalists, use it for their analysis and trading.
Trader's looking to enter the market are often sent off on a journey to discover the 'holy grail' of market entries. They study numerous theories; Japanese candlestick reversals, contrarian theory, oscillator divergence, wave theory, and others. Traders who are just starting out, put their trust in indicators and oscillators and rely on them make the decisions on when to place an order - and the more indicators/oscillators they discover, the more they add into their strategy.
Traders can spend countless hours and days looking for ways to enter the financial market. On their journey to discover the 'Holy Grail' of market entry, they explore Japanese candlestick patterns, contrarian concepts, the large variety of oscillators, the Elliot Wave theory, and a lot of other technical approaches. Beginners usually learn from oscillators and indicators how to identify entries into the market; the more indicators and oscillators get studied, the more they're used in trading.
Pivot points are extremely popular with traders, they are used to spot direction, probable reversal points and potential support and resistance levels. It's a well-known tool that is of particular interest to novice traders, due to the simplicity of the mathematical formulas it incorporates.
Most traders, including novices, know that prices that reach the support line, bounce up and prices that reach the resistance line retract. This applies to price activity within a range. In fact, it taps into the very definition of range - price action within a bounded area on the chart. Due to this, range trading is very popular - so much so, that many systems have been designed around trading support and resistance and extracting the most out of the predetermined path of the price.
Visualise yourself perfecting your trading method: spending countless hours working on a perfect system that has a 90% win rate and small losses. You study, study, study, and study again. At a certain point, the back-tested results give you the confidence to take it live.
A general flaw of many traders is the habit of seeking "certainty" via indicators. It's not uncommon to see charts with five to seven indicators overlaid on them. However, the traders that seek certainty through indicators are usually the same traders that don't "dig deep" into the indicator to understand how it's built.
When experienced stock market speculators attempt to apply their battle-tested systems on Forex pairs, they often suffer the same setbacks as aspiring traders. Why is this? What makes the Forex market so different from stocks, bonds, or indices?
In the previous article, Tricks of the trade - The Head and Shoulders pattern, Part 1, we look at how a few simple tweaks can increase the hit rate when trading the head and shoulders pattern. In this second part, we look at some advanced techniques which can alert you in pre-positioning your trades long before the rest of the crowd.
How to catch better entries with the Head and Shoulders Pattern? In this series of articles learn the different ways you can trade the head and shoulders chart pattern. The first part of this article deals with setting more realistic target levels on the head and shoulders pattern.
Unless you intend on trading one market at a time, it is vital to understand how different instruments markets interact with one another. A correlation, in simple terms, describes how much (or how little) two markets move together over a period of time.
Mistakes in the trading business, however, can be costly. In addition to this, it can also discourage newer traders, eventually forcing them to throw in the towel. To help shorten the learning curve, we've come up with a brief list of the most common mistakes we see occur on a regular basis…
To say confluence is powerful would, in our humble opinion, be a huge understatement! We agree that individual pattern recognition is worthy of attention, but without additional confluence it is not something we would entertain as a conceivable setup. .
The above example shows how you could have traded this pattern. After the neckline support had been formed with prices testing support near the left shoulder, price rallied to make a higher peak (head) and bouncing off to form the right shoulder.
Have you ever found that your trading system works great one day but fails miserably the next? Your problem is quite possibly market type identification. Too many Forex traders will trade the same way no matter what the market is doing. Instead look to identify the market type first, and then devise a strategy appropriate to that market type.
Swing trading simply describes a method of approaching the market where the trader is seeking to capture percentage moves in a currency pair, referred to as "swings". Trades taken in this manner are usually at a reduced position size to account for the large trade parameters and can last anywhere from a day to several weeks and are typically entered on the daily time frame and above though some traders so use the 4hr charts also.
Unlike support and resistance levels, trendlines are drawn at an angle. These widely used technical lines are, first and foremost, used to determine the trend. By drawing these lines one can establish whether a market is in the process of rallying north (an uptrend), dropping south (a downtrend) or in the phase of a consolidation.
Developed by Scott Carney and Larry Pesavento, after being originally discovered by H. M. Gartley, the AB=CD pattern has become an effective technique to have in one's toolbox. After months of research, back testing and also live trading, we feel comfortable presenting this setup to our readers. Just to be clear, the following is not the holy grail. We've simply took what Carney and Pesavento taught and traded it in our own way, and so far, it's worked nicely.
In the previous article, we looked at how traders can ignore the moving average and instead focus on just the Average Directional Index (ADX) and the Moving Average Convergence and Divergence (MACD) indicators to determine the trend strength.
Technical indicators are often used by traders for a number of reasons, but primarily to detect the changes in the markets. Technical indicators are relied upon for signs of any change in direction, or the momentum in the price of the underlying security as well as volatility in the markets.
For many Forex traders, EAs represent dozens of hours spent carefully crafting an automated version of their own trading strategy. It is a labour of toil and love, but more often than not all the donkeywork ends in an EA that does not come up to scratch. Perhaps it works inconsistently, or worst case it does not work at all.
Automated day trading is probably one of the most exciting things for day traders in the forex community. It offers traders the option to build a mechanical trading system; one that doesn't require human intervention and one that can, of course, make money consistently.
Using oscillators is very prominent in the world of trading, whether you are just beginning or have been trading professionally for years. Oscillators are based on math formulas and are categorized as inductive statistics. In forex, they make up a vital part of technical analysis since they are used to confirm market trends, signal when a trade is being overbought or oversold under extreme conditions, and also inform the trader when the market's movement is about to reverse due to loss of momentum.
ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for over a decade. Empowering the individual traders was, is, and will always be our motto going forward.
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