Even after the trader gains the knowledge from dozens of books or videos or after he visits couple of lectures, his education should not end, it should only move to a “higher” level.
Here, we will try to provide some hints where each trader should move gradually in his education and trading.
The skill of forex trading may be easier to grasp for persons who are already knowledgeable or actively involved in the trading of stocks. Nevertheless, there are many aspects of trading that are unique to forex trading that the beginner would do well to take into consideration. It is important to understand forex trading jargon in order to hit the ground running when starting out in forex trading.
Here are some terms that you will encounter often and that you should therefore know:
The misconception is that because this volume may be but a drop in the bucket of the volume of the entire forex market, that it is not of much use. However, research has shown that the volume information provided by your retail broker, is useful in that it may provide a fairly accurate reflection of percentage changes in overall market volume in a given time period.
Support and resistance are the foundation for nearly every technical trading strategy. Anyone who has experience in trading Forex or any other market has heard about support and resistance levels.
Support and resistance levels rarely work as precise points on the chart where the market reverses or not. Many new traders may overlook this important fact about support and resistance levels. The levels are not an exact science that can tell you where the market will reverse exactly. Rather, it’s more about probabilities and possible scenarios.
Most of the price fluctuations in the Forex market are just noise, that is, price movements which are not part of the general trend but rather price movements which are likely to turn out false and be reversed.
With direct hedging, the trader would place a second trade that takes the opposite position to the initial trade. For example, your initial trade may be to go long GBP/USD. To hedge against this, you may decide to go short on the same pair. This is known as a “perfect hedge”. Despite the fact that your net profit is likely to be zero in such circumstances, it allows the trader to be able to make more money without increasing the risk, if he can time the market correctly. Some may argue that it is better to close out the initial trade and to open a new position that seems more lucrative. While that may be true, it is really up to the trader to decide which tactic would work better for him/her.
Well, you may be surprised to see your strategies not working and your results lacking when you come back to trading after the time off. While breaks are always a great thing and everyone should take regular breaks, taking time completely off trading for a month or more will probably get you out of the flow state you were in when you were profitable. Then, when you try to return without preparing first you will most probably be confused as to why you are not trading like you used to a few months ago.
Well, you probably have seen this. It’s habitual for most people.
It is known as the confirmation bias in psychology.
Basically, it describes how humans make decisions that have nothing to do with rationality or objective confirmation of one’s view. On the contrary, the confirmation bias is a tendency for humans to seek confirmation of their views where there is very little of it or none.
Whether you are using the platform provided by your forex broker or are using a 3rd party platform such as MetaTrader4 or MetaTrader5, there are certain features which you need to look out for when making your selection. Here are a few features you need to bear in mind:
If you’re a newbie in the world of Forex trading and you’re looking for information on how to get started, know that you’ll most likely encounter a lot of false and inaccurate information.
Patience is regarded as one of the greatest human virtues in almost all religions and spiritual traditions. Patience, whether virtue or not, is definitely a very beneficial and profitable characteristic when it comes to trading the Forex market.
Forex swing trading is a medium-term trading style that aims to profit from trends or larger price swings in the market, hence the name “Swing Trading”.
The risk/reward ratio in trading is the relationship between the size of your stop loss to the size of your profit target. So, for example, if your stop loss is 50 pips away from the entry price and your profit target is 100 pips away from the entry then your risk to reward ratio is 1:2.
The risk/reward ratio is no doubt, a very important aspect that should always be considered before taking any trade as an integral part of a good risk management strategy. This may seem like a no-brainer, but it’s amazing how easy it is to forget about it once you spot a good looking chart pattern or a nice trading signal.
Most traders know the feeling. They spend years building a trading strategy, trying to trade on demo accounts and then, after lengthy and careful contemplating, they find the confidence to go out into the world of real trading.
A lot of things in Forex trading and generally in our lives are simply outside of our control.
You may have the perfect signal, or in fact, a multitude of signals - all converging and agreeing that a particular currency pair should be moving higher or lower. Nevertheless, there is always some probability that any signal or setup will fail and the market will go in the opposite way. But the important thing to realize is that we can not control the outcome of the trading setup and therefore the chance of being wrong should not disturb us.
How is this even possible? What is the problem? This will be the topic of today’s article.
Has it ever happened to you that the broker deepened your loss compared to the one which was originally set as Stop-Loss?
Do you know why?
So many traders want to find that one tool or indicator that will do it all in trading so that they won’t need to look at any other indicator.
The average daily range is a nice tool (or maybe better said, just a useful statistic) that’s most practical for day-trading the Forex market, although it’s definitely also useful for other trading styles like scalping or swing trading.
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