The whole game on Forex is formed depending on the price movement. The success of any game depends on how the player handles the trend. The concept of “trend” includes a purposeful price movement in one direction. If the price goes up, there is a bullish trend, in case of a fall, a bearish trend is analyzed. And it is not so important, that there is a long-term or short-term game. In any case, the determination of the price trend, the pattern of the whole process remains constant. The trend movements are influenced by many external factors, which are quite difficult to observe, so only a few factors are selected and analyzed from the whole variety. The analysis of the dynamics of the whole picture of the trend is a professional analysts of the financial exchanges, moreover, often the influence of some is quite small. The most significant are government, gossip, expectations, international events, supply and demand.
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Forex trading: making profit on failed movements
For example, you find a rectangle and expect to break through the border. In this case, the order is set in such a way that in the case of a breakout, you become a long position. Trading is conducted on an hourly chart, which you check very often to control the movement.
And the market begins to move. The order is triggered and Forex trading involves the opening of a long position. After making sure that the stop order is set correctly, you continue to monitor the market movement. And then there is an unexpected reversal of the bar, which earned money in the opposite direction.
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.
Methods of technical analysis of the Forex market
Generally, Forex technical analysis is defined as the study of previous price dynamics to predict future patterns and trends. This approach is based on the hypothesis of the cyclicity of human behaviour. Usually, technical analysis of the Forex market makes it possible to make price forecasts with a fairly high probability of results.
There are a lot of technical approaches, from which each trader should find the most suitable for him, based on the chosen trading style. The greatest degree of immediate feedback is provided to the intraday trading period, which gives the opportunity to “keep the fingers on the pulse” and a willingness to take action if the forecasts are incorrect. As for the past situation, the technical analysis of the Forex market is quite informative, but at the same time does not give us absolutely any guarantees regarding the future price movement.
Forex risks in a volatile market
Periods, accompanied by high variability, often entail substantial risks of Forex trading. Traders should take into account the various options of how credit leverage will affect their trades, given the fact that average daily movements increase during periods of excessive volatility. The calculation should be made at the half and one percent of the margined security for how certain levers and the size of positions will affect the trading account.
Under normal market conditions, and hoping to make up to 50 or 100 points, the most suitable would be trading positions, say two lots. With a potential loss of up to 200 points over more volatile periods, Forex risks relative to profitability are much higher. Alternatively, to compensate for increased volatility, traders should consider options for smaller trading positions. More appropriate will be one lot than the average position of two lots.