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How to trade Forex?

Rule 1: struggle for success

The main rule of success is that it must be fought for. No business will be profitable without efforts. To understand how to trade Forex, you need to carefully plan the results of your trade, whether they are long-term or short-term. Experienced traders make their own trading schemes and watch the charts, taking into account the slightest changes in the price and time movement. Gradually, with the accumulation of experience, the user will be able to understand the causes and consequences of market processes.

Rule 2: responsibility for results

First of all, success depends on the trader himself. Ready-made information, trading terminals, brokerage firms and analysts ‘ advice are just tools useless without proper application. William Gunn never used newsletters, independently checking the market and making transactions. Despite the fact that representatives of service firms know how to trade Forex, they are not interested in the end result of the client’s trade. Brokers and analysts are only interested in receiving commissions, demanding them regardless of the success of the transaction. Therefore, in order to reduce costs and increase profits, the trader should use a reliable and functional method of obtaining income from the financial market. Such methods should provide accurate and reliable information about the price movement and time of transactions.

Rule 3: trading plan

In order to successfully enter the market and know how to trade Forex, the user must have a clear plan of action, painted on time. The accuracy of the plan and its reliability are the main criteria for profitable trading. It is necessary to set a limit of acceptable losses, because in the case of a reversal of the market cycle, the Deposit will begin to decline rapidly. It is also necessary to set the ultimate goal for profit. Some traders forget about self-planning and rely on computer oscillators, which eventually turns into a collapse. If the market rate changes rapidly, the indicators do not keep up with its movement and show outdated data, reducing the profitability and profitability of such trade.

Rule 4: placing orders

For successful trading Gunn advised to use pending orders. To understand how to trade Forex, you need to monitor the possible risk of the transaction and in time to put stops that cancel slippage at the entrance. To exit the market, you can use limit orders, which are based on the price and time of the required target. If by the end of the selected period the planned prices have not been reached, it is recommended to exit the market at current market prices.

Rule 5: profit ratio

It is not superfluous to set the profit factor in relation to the degree of risk. The desire to know how to trade Forex without losses is justified, but it is necessary to study the previous charts of the market. When a trader determines the amount of decrease or increase in market prices, then on the basis of these data, he can establish a relationship between the planned profit and potential losses.

Rule 6: the individual trade

Trading should be conducted individually, because it makes no sense to share your positions with other traders. Often, their effectiveness and validity begins to be questioned, which destroys the confidence of the owner of the Deposit. Loss of confidence leads to doubt and an attempt to change the trading method. This eventually turns out to be a loss of profit for the trader.

Rule 7: leverage

Some traders go bankrupt by trading with high leverage. In order to trade Forex correctly, you need to risk no more than ten percent of the total trading capital. Each trading position that is opened in the market must have three times the minimum security. Simply put, if the minimum security for any contract is seven hundred dollars, the trader should have in stock at least two thousand hundred dollars.
Rule 8: double vertices

The best way to enter the market from the short side is the rule of double tops. It is in this case that the price highs are challenged. Very often, the time of upward slopes ends, and the market moves to a downward trend. A user wanting to know how to trade Forex should take advantage of the first rally to test the tops on the possibility of selling. Often this process ends with the formation of double peaks. After reviewing the charts of the market history and previous indicators of double peaks, you can determine the path along which the market will go to break the double top again. Most often, this is a percentage or two percent excess of current market prices. An important element of a successful transaction is the distance between the vertices, because the greater it is, the more reliable the General formation will be. First, we need to consider long-term charts, because the larger their scale, the higher the importance of the double vertices.

Rule 9: the double bottom

Similar to the double tops, the appearance of double bases opens up wide opportunities for the trader to trade. It is with such reasons that most of the “bullish” markets begin, and therefore, if necessary, to understand how to trade Forex, you need to carefully monitor their formation in all time intervals.

Rule 7: leverage

Some traders go bankrupt by trading with high leverage. In order to trade Forex correctly, you need to risk no more than ten percent of the total trading capital. Each trading position that is opened in the market must have three times the minimum security. Simply put, if the minimum security for any contract is seven hundred dollars, the trader should have in stock at least two thousand hundred dollars.

Rule 8: double vertices

The best way to enter the market from the short side is the rule of double tops. It is in this case that the price highs are challenged. Very often, the time of upward slopes ends, and the market moves to a downward trend. A user wanting to know how to trade Forex should take advantage of the first rally to test the tops on the possibility of selling. Often this process ends with the formation of double peaks. After reviewing the charts of the market history and previous indicators of double peaks, you can determine the path along which the market will go to break the double top again. Most often, this is a percentage or two percent excess of current market prices. An important element of a successful transaction is the distance between the vertices, because the greater it is, the more reliable the General formation will be. First, we need to consider long-term charts, because the larger their scale, the higher the importance of the double vertices.

Rule 9: the double bottom

Similar to the double tops, the appearance of double bases opens up wide opportunities for the trader to trade. It is with such reasons that most of the “bullish” markets begin, and therefore, if necessary, to understand how to trade Forex, you need to carefully monitor their formation in all time intervals.

Rule 10: internal days

Often the market formed internal days-the highs and lows of the current day are in the range of the previous ones. This signal serves as a warning to the trader, talking about the imminent change of direction of the market.

Rule 11: reversal signals

To know how to trade Forex and make a profit, a trader must be able to work with reversal signals. Such signals give a short-term perspective of the market trend. If the market makes a five-day rally, makes a gap up, fills it and closes in the lower position, it can be an indicator of a rapid decline in prices. The described case is one of the strongest reversal signals indicating a trend change. Also, a good indicator can be a situation of five-day market growth, with its strong opening, further increase and closing, which will happen below the close of the previous day. After any of the described signals, the market will move in the opposite direction for at least three days.

Rule 12: Fibonacci numbers

An important element to understand how to trade Forex is the Fibonacci numbers. William Gunn did not give special recommendations for their use, but actively used them in their own trade. Fibonacci ratios-0.382, 0.500 and 0.618, are one of the components of the market movement. Monitoring market reversals at these levels can be very useful.

Rule 13: suitable broker

A good broker that can quickly and efficiently meet trading needs will be an invaluable help for the client. Its main task will be to receive orders and their implementation at maximum speed. In the realities of modern market trading, the time of entry of orders to the exchange should not exceed a few seconds. E-Commerce increases the speed of data processing. A good broker should not tell the user how to trade Forex, but should provide the client with the possibility of technical and fundamental analysis. The only task of such a broker will be to provide the best service, trade execution and maintenance of issued orders.

Rule 14: diversification

First of all, diversification is the distribution of trading positions in different groups of assets. Trader conducting transactions on the commodity markets, can share their positions on individual meat markets, metals and grains. At the same time, if adverse circumstances arise in one sector, positions in other markets will remain unchanged. If the user wants to trade Forex, he can distribute his positions in different sectors of the stock market.

Rule 15: interest stop orders

The use of stop orders should be based on a percentage of the current prices. For more detailed information, please see the graphs of the history of the market and the previous price. In some cases, it helps to use a one-percent stop order, but in others the percentage may vary.

Rule 16: market position

There are three market positions that can be held by a trader who knows how to trade Forex. This is a long position, a short position and a non-market position. In some periods of time, the user simply needs to be outside the market. The thing is that any market during the change of cycles can give weak signals that knock out a trader on a stop order. The conclusion of the transaction after two or three knockouts in a row is difficult for the psyche, and therefore the exit from the market gives the client a break, looking for new deals.

Rule 17: non-standard orders

Placing pending limit orders for a user who understands how to trade Forex should not be limited to round values. For example, when buying grain for three dollars it is better to place orders at the level of three dollars and one cent. Although it will be slightly above the price level, it will increase the probability of successful execution of the transaction. The thing is that the levels of round values are psychologically attractive for market participants, and another order placed on them may not be executed in due measure.

Rule 18: fundamental factors

Fundamental factors are important in trading, being the driving forces of the market. Users should always have up-to-date information about economic events, political situation and special moments valuable for trading. The technical analysis will give the trader an idea of the approximate market reaction to the above factors.

Rule 19: price gaps

A user who wants to learn how to trade Forex, you need to remember the gaps, which are very important for analysis. There are three types of market gaps. First, it is a gap of a breakthrough that occurs after the areas of price accumulation. Such cases lead to a strong market movement and can bring a solid profit. In addition, there is an average gap that occurs after a uniform market movement in one direction. In most cases, this indicates a further movement of the market in the same direction, but for a longer time. The last type is the gap of exhaustion, which occurs at the time of completion of the market movement.

Rule 20: pyramid building positions

If a trader wants to trade Forex and earn income, he will definitely use the method of pyramidal build-up of positions. First, he must open half of his trading position on cyclical lows or obvious grounds, according to the planned cycle of time and prices. Stop orders are placed below this minimum. At the time of passing the second wave to the base you need to add another quarter of the position, after analyzing the Elliott waves. Stop orders in this position must again be placed below the minimum. With the passage of the fourth wave, you need to add a quarter of the position again and place stop orders in the same way. Finally, during the fifth wave, the trader should close positions one by one, removing the placed orders. If the market reaches a peak, it is necessary to close all positions, cancel all stop orders and wait for the beginning of the next trend.

Rule 21: trading in the direction of the main trend

William Gunn has always mentioned that in order to know how to trade Forex, you need to move in the direction of the main trend. The user is able to enter the market on reactions against the main trend, and this will increase his profit. Such reactions can last 1, 3 or 5 days, weeks or months.

Rule 22: harmonic cycles

For a trader who wants to trade Forex, indicators of harmonious cycles will be important. Some basic cycles of commodity markets change with a ten-year period. In this case, it would be appropriate to study the charts and charts of the market history for this period. If the application of long-term harmonious graphs on each other for their performance enhancing the same, then there is a high probability of the upside of the current trend.

Rule 23: time and price square

If the market bases are formed at a certain price, then in the future the market will make a rally of hourly, daily, weekly and monthly chart until it reaches the square of the set price. A trader who understands how to trade Forex can take advantage of this circumstance to increase his own Deposit.

Rule 24: timing

The moment at which lows and highs are formed is based on time and does not necessarily refer to the lows and highs of the market. Sometimes impulses carry the market beyond these indicators.

Rule 25: observation of oscillation time

An important element of successful trading is the calculation of the time of price fluctuations. It is necessary to monitor the pricing and the progress of time in the lows, highs and tops.

Rule 26: psychology and health

Elements of psychology are widely used in trade. If the client has an idea of how to trade Forex, he will apply them in his activities. To make important decisions and make responsible deals, you need to feel strong not only physically, but also morally. Carefully considered decisions reduce the risk of loss associated with large financial amounts.