Understanding Basic Forex Trading Techniques
Understanding Basic Forex Trading Techniques - Foreign Exchange or better known as Forex is an investment with foreign currency exchange instruments. This Forex trading system is very popular because of the very promising profit potential.
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Even so, if you don't have a good strategy, Forex trading can lead you to a debt hole that is also not kidding. Moreover, there is no fixed strategy for Forex trading. it means that the trading strategy used today results in large losses for the following days. So even professional traders are still learning about Forex strategies.
If you are a novice trader, there is no need to feel inferior with the shadow of losses because the potential is always there. You only need to learn and learn basic Forex trading techniques in order to understand changing market conditions and still be able to take the right steps.
Get to know Forex trading patterns
As already explained, Forex trading strategies can vary depending on market conditions. However, there are some basic Forex trading techniques that novice traders must know.
Candlestick – Chart is a type of chart that is commonly used to analyze prices,. This chart provides all information about the movement of nominal money accurately and completely. This gives traders the ability to take steps based on the information in the chart. Beginner traders prefer candlesticks because the information provided is complete and easy to understand.
Trend - One of the basic concepts of Forex trading is that the nominal price of money tends to move towards a trend, either low or high. Trading based on this trend uses the identification of Forex pairs so that traders can assess which other strategy to take. According to his trading style, traders can choose one type of indication, such as the RSI or relative strength index, which is used most often with maximum profit opportunities.
Scalping – Another technique is scalping which is suitable for beginners because it is easy and minimal risk. This scalping technique is more focused on small profits because it focuses on minor price movements. If you read the opportunities more carefully, this scalping technique can provide many benefits.
Fibonacci – The most popular technique among intermediate traders is the Fibonacci technique. This one technique uses bear resistance and support levels so the time it takes is longer. When the market position is trending, this technique can be applied perfectly. That is by taking a 'buy' position when the retracement is at support. When market conditions decline, traders can 'sell' at the resistance level.
Know Forex trading trends
Trends are things that traders are most familiar with. Although there are also trading techniques against the trend, if you lack experience against the trend, it can be very dangerous. This is because in general trading with trends has easier profit potential. Trends in Forex can be a way of seeing when the trend is up and when it is down. For example, if the trend is up or uptrend, the trader can open a long position. Meanwhile, if the position is trending down or downtrend, you should open a sell position.
However, if you are more observant, you will see opportunities between the three trends, namely bullish, bearish, and sideways; then the profit opportunity is even greater. For beginners, learning how trends rotate including the start and end of trends in forex trading is a good start. This is the first step for traders if they want to trade currency pairs later.
Know when to 'Buy' and when to 'Sell'
In addition to knowing trend positions, novice traders must also know when to open long positions and when to open short positions. Broadly speaking, traders can open long positions if the currency pair is at the lowest or support level. The hope is by placing a long position at the lowest position, then the price can reverse up. But traders still have to understand the theory of support-resistance.
The opposite of long positions, traders can open short positions when the currency price is at the highest level or resistance level, where the price seems to rise but then falls. This kind of price correction is a profit opportunity that traders are looking for because if it matches the prediction, the price will not continue to rise but will return to the initial trend.
Learning forex trading does seem easy but if you don't pay close attention it will make you confused. As a first step, you should first understand the terms that are often used in trading. Then implement what has been learned by using a forex robot simulation.