Here's how you should trade the currency market. You should develop your "Holy Grail" (almost) trading system based on the following. It worked for me, which is why it should work for you too.
1. The market players usually based their trades on certain predefined price levels. They don't just enter or exit whenever they like. These price levels are the Support and Resistance that many of us come to know of. Currencies tend to move well between these Support and Resistance levels. The most common methods to determine the Support and Resistance levels are Fibonacci, Pivot Points, Trendlines and the Exponential Moving Averages.
2. When the support and resistance levels are determined, the next step is to look at price action at these levels - whether price will break through or reverse. The most common method to analyze price action is through the use of Candlestick and Chart Patterns.
3. Once you have determined the entry point from the above two steps, boost your confidence to trigger the trade with the use of indicators such as Stochastics, RSI and MACD. Even though these indicators are lagging in nature, the appearance of divergence in Stochastics, RSI and/or MACD is not!
4. Always keep a wary eye on the latest economic data which affects the currency - beware of newsbreak which includes release of important economic data. Newsbreak of this kind will influence price movement significantly and render the technical analysis above meaningless.
5. Remember to implement an appropriate "stop-loss" in case price goes against you - never risk more than 3% of your account per trade.
Here you have it. I have provided the five (5) essential steps for you to develop an almost "Holy Grail" trading system for yourself. All you need to do now is to try each specific method outlined above and see which works best for you. Paper trade using historical data - practice until you get it right, keeping in mind the five (5) steps above.
We have come to the end of the article. I would like to thank you for taking your time to read it. If you have any questions or would like to contact me, my email address is listed below.
1. The market players usually based their trades on certain predefined price levels. They don't just enter or exit whenever they like. These price levels are the Support and Resistance that many of us come to know of. Currencies tend to move well between these Support and Resistance levels. The most common methods to determine the Support and Resistance levels are Fibonacci, Pivot Points, Trendlines and the Exponential Moving Averages.
2. When the support and resistance levels are determined, the next step is to look at price action at these levels - whether price will break through or reverse. The most common method to analyze price action is through the use of Candlestick and Chart Patterns.
3. Once you have determined the entry point from the above two steps, boost your confidence to trigger the trade with the use of indicators such as Stochastics, RSI and MACD. Even though these indicators are lagging in nature, the appearance of divergence in Stochastics, RSI and/or MACD is not!
4. Always keep a wary eye on the latest economic data which affects the currency - beware of newsbreak which includes release of important economic data. Newsbreak of this kind will influence price movement significantly and render the technical analysis above meaningless.
5. Remember to implement an appropriate "stop-loss" in case price goes against you - never risk more than 3% of your account per trade.
Here you have it. I have provided the five (5) essential steps for you to develop an almost "Holy Grail" trading system for yourself. All you need to do now is to try each specific method outlined above and see which works best for you. Paper trade using historical data - practice until you get it right, keeping in mind the five (5) steps above.
We have come to the end of the article. I would like to thank you for taking your time to read it. If you have any questions or would like to contact me, my email address is listed below.
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