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Forex-trading-signals

How to Read A Price Chart▶️ How Does the Market Move? At any given point in time, the market is likely to be moving in one of three directions: up, down, or sideways. Which direction is up? Which direction is down? And which way is sideways? When the market is moving up or down, it is said to be in a trend. When the market is moving sideways, it is typically in a period of consolidation. There are two types of trends that markets can be in: a bullish trend continuation trend or a bearish continuation trend. ▶️ Bullish Trend Continuation: Buyers can control price action when the market is in a bullish trend. This market identified by price action that has started at an Initial Low and continued to rise up, achieving a New High when it breaks and closes above the previous high. As the market retraces, price action will continue to fail to break and close below the most recent structure lows. This will create a Higher Low. As the process repeats itself, we see a pattern of new highs and higher lows being created. This pattern reflects the changing dynamics of the market, and provides insight into the market's future movements. When price action is presenting this type of pattern, trend continuation traders should look for opportunities to buy in the market. ▶️ Bearish Trend Continuation: A bearish trend continuation pattern indicates that the current downtrend is likely to continue. The sellers have taken control of the market and are looking to drive prices lower. This process is identified by price action starting at an initial high and then moving downward. This creates a new low as it breaks and closes below the previous structure lows when looking left. As the market pullbacks, price action fails to break and close above the most recent highs. This has created a Lower High. As the process repeats itself, we see a pattern of new levels being created, followed by decreases in the level of the old level. If you're a trend continuation trader, be on the lookout for selling opportunities in the market. ▶️ Consolidation: When the market is in a period of consolidation, it is difficult to tell whether it is heading in a bearish or bullish direction. Instead, price action is “choppy” as there is no clear directional movement. During the period of consolidation, trend continuation traders should be careful when looking for trading opportunities. ▶️ Support and Resistance After the formation of a New High, the market will retrace and create a higher low. When a movement occurs, the now-forming area of resistance is an indication that something important is happening. As price action pushes up from the newly created higher lows, that resistance level becomes the last line of defense for sellers to try and stop the buyers from rallying. Failure to break through the resistance level could indicate an uptrend period or reversal. If the price moves past the resistance level, this means that the trend is continuing. Remember the previous NH that turned into resistance after the retrace? Well, once this resistance level is broken, it becomes support. If price action retraces back down from our recent highs, this structure level should support the overall trend. ▶️ Forming Structure: To create a valid new structure high or low, we need to watch for the market to break and close above/below the previous structure. When a trend is bullish, the market can create a "Higher High" near or above the highest point reached in the trend. When a trend is bearish, the market can create a "Lower Low" by trading near or below the lowest point reached in the trend. In order to have a valid Higher High, Higher Close, we need a candlestick that breaks and closes above the previous candles' all-time highs. It is only after we have generated a new structure that is highly formed that we can consider it to be a valid one. If you are looking for a bearish trend, simply use the opposite. ▶️ Why Is Structure Important? Structure is important because it can help you predict where price action is likely to go. Previous support and resistance levels in the market act like a magnet, pulling price action towards them. When price action reaches high levels that have been hit multiple times in the past, it is considered to be a major structure level. It is important to pay attention to the main structural levels, because it is likely that the price action will be related to these levels. Smaller ebbs and flows of a trend can be detected inside minor structure levels. These levels serve as both support and resistance, although they lack the strength of the primary structure levels indicated above.
Education
by DeGRAM
8
COMMON CAUSES FOR OVERTRADING👋 Hello, fellow Forex traders! Overtrading is the most common problem, especially for traders trading on lower timeframes. It can arise for a number of reasons, so if you don't know what the main purpose of your trading is - i.e., what instruments you trade on, how you trade, what your trading strategy is, your motivations, personal styles and your trading and personal history I will give some explanations why traders become addicted to trading and give some possible solutions to this problem, hoping that among them you find your own solution. In order to determine when you become overly active, you need to have some basic criterion with which you can build off and thus be able to determine the amount of deviation from this value - it could be, for example, the number of trades made or your trading volume. Of course, there can be situations where a high trading frequency is acceptable, such as when markets are volatile and there are significantly more trading opportunities than usual. 1️⃣ Emotional Trading This happens when a trader trades forex, transfixed by feelings of excitement and pleasure, rather than for profit. Just like most people who play in a casino. If your goal is solely to have fun and get emotionally excited, then you must also realize that in the long run you are likely to develop an addiction to trading, and you are unlikely to profit. If you want to profit from your trading, then you need to change your goals, forget the fun and excitement, and move to a more professional and structured approach whose desired result would be trading productivity expressed in monetary or percentage terms. 2️⃣ Lack of trading strategy When a trader does not have a rule-based strategy and, therefore, any parameters for determining when to trade and when not to trade, any price movement in the market tempts him. In this situation traders are very prone to chase trends and often find themselves buying when the trend is down and selling when the trend is up. They get the impression as if they are doing everything in vain, as if the market is watching their actions. Do you know this situation? The most important thing you can focus on is developing your trading strategy, which clearly identifies whether there is a particular trading opportunity, fundamental data, technical analysis or a combination of both. This will help you become more selective in your trading. 3️⃣ Boredom In a quiet market where traders spend most of their time in front of their computer screens, there will be times when there are weak or no trading opportunities. It’s time when traders can get bored. These are natural periods in trading. For some traders, this can be very challenging especially for beginners, traders whose trading activity is based on emotional excitement, who work on enthusiasm. An important question you should ask yourself is the following: "Am I trading to relieve boredom or to make money?" 4️⃣ You need the money This is one of the worst situations in trading. It is a strong and powerful state, but it will not contribute to good trading overall if your decision-making is focused solely on making money and not on your trading strategy. Evaluating your financial needs and the effectiveness of your trading is very important. And you don't have to adjust your search for entry signals with what you don't have enough for beer. Any action you can take to alleviate your acute need for money will be a big step forward for you. 5️⃣ Enthusiasm in Trading Novice traders are full of enthusiasm. Traders who are entering new markets and using new trading methodologies also tend to be more enthusiastic and passionate. While this enthusiasm is undoubtedly a positive quality, there is also a dark side to it, seeing it as excessive enthusiasm and looking for any opportunity to open a trading position. Maintain your enthusiasm, but channel it into developing your trading strategy and discipline. If you have certain trading considerations, practice them on a simulator/demo account, where costs are obviously much lower. 6️⃣ Lack of Patience Traders who suffer from a lack of patience become addicted to trading because they will take opportunities that are not part of their trading strategy, and thus they will naturally make more trades than necessary. Develop patience in yourself, look for opportunities to analyze the markets, and take the time to just look at them rather than act on them. You might want to try practicing self-awareness to help identify and work with overcoming the desire to alleviate feelings of impatience. 7️⃣ Revenge Trading This is when traders have lost money in losing positions, making mistakes or accidentally opening positions, etc. and are usually eager to "get their money back". Despite the fact that the goal of such behavior/thought is positive, the subsequent behavior usually is not. Simply put, a desire to "get even". Traders chasing their losses will deviate from their trading strategy by opening positions that are probably profitable, whether they are consistent with their trading strategy or not, for, according to their psychological mindset, their goal now will be to make money, not to stick to their trading strategy. If you have incurred major losses or lost a large amount of money in a number of trades, you should generally take a time out. This timeout will allow you time to redirect your trading state and refocus, and most importantly, it will break the "losing money → feeling angry → wanting your money back" behavioral pattern. Time out breaks this behavioral pattern and allows you to refocus - use breathing and relaxation techniques or take a slow walk that will help you dilute your emotions and reduce your desire for revenge trading. 8️⃣ Fatigue When you are tired, physically or mentally, your brain does not have enough energy to function at full capacity, and with low "fuel" your work will have low levels of self-control. It is self-control, not a trading strategy, that is needed to engage the brake in your brain to stop your trading, and that requires a source of energy. When you are tired and your fuel level is low, your self-control will also be low, there will be more chances for excessive and unreasonable trading. Rest and glucose (which we get with food and sweets) are the two main factors in optimizing brain function on the energy level. When you trade, you must be firmly convinced that you are awake and full of energy. ✅ Thus, there are several reasons why traders overtrade, and I have provided you with some possible solutions to help you overcome them. Analyze which one might be most appropriate to your situation, test them out and write about them in the comments.
Education
by DeGRAM
8
DOUBLE TOPS/BOTTOMS🔵The double top and double bottom are a pattern that can be used to find a counter-trend trading opportunity. This pattern can also be used as an entry technique in the markets. When this pattern is seen, the market is signaling to traders that a particular level of structure is important because price action is refusing to break and close above or below it. A double top and bottom are a sign that the market is failing to break through previous levels. When identifying a trend continuation pattern in bullish market, the trader is looking for a new high in a price action, followed by a pullback, followed by the market again hitting a new high. In cases of a double top, the market does not rally high enough or close above the previous top, indicating that the price action does not have strength to break through the previous level. 🔵 Filters Although it is possible to trade the double top and bottom successfully as mentioned above, I have added a few filters to eliminate some of the false signals and to be sure that I take only the high probability trades. There are many different filters that you can use when trading, but the main one I use is the Relative Strength Index (RSI). I look for overbought and oversold conditions as well as divergence to help me make decisions. When identifying this pattern, I first look for the RSI to be overbought for double top and oversold for double bottom. If this happens, then I have a valid trigger bar. After price action retests the trigger bar, I look for divergence. 🔵 Divergence: A divergence between the RSI and price is formed when the two send contradictory signals. If price is producing repeated high and lows, the RSI should also be trending up. Divergence occurs when price is producing higher highs and higher lows, yet the RSI shows a higher high, then a lower high. In the case of a double top, as price action gives us an initial high (trigger bar), followed by an equal high (the retest), the RSI usually prints a lower high, suggesting that the trend may be losing momentum. 🔔 The best place to put stop loss is above or below double top/bottom. As with any trading technique, your stops for this pattern will ultimately be up to you and I would advise that during your back testing you test out multiple areas, but here are some common rules that I use for this pattern. When placing a stop on a double top and bottom, I will take 1-2 ATR way and put it above or below the high and low of the pattern.
Education
by DeGRAM
8
HOW TO SPOT A REVERSALLet's see how the characteristics of a reversal and a pullback differ. 📈 A pullback: - Usually occurs after a strong price movement; - It does not last long; - The fundamental (macroeconomic) data does not change; - In an uptrend there are hints of its continuation, similarly for a downtrend. 📉 Reversal: - Can occur at any time; - Long term; - The fundamental data is changing it is often the reason for the reversal; - In an uptrend there is no hint to its continuation, the buyers' strength decreases (and vice versa for a downtrend). Unfortunately, there are of course no guaranteed methods to determine where there is a pullback and where there is a trend. I would buy this one for any money, and everyone would buy it. That is why it is determined by a number of different instruments, from a simple multiframe analysis and trend lines to various systems. 🔴 Reversal: Fibonacci Levels Although I myself am not a fan of Fibonacci levels and its many counterparts, it seems that everyone uses them but me. Let's listen to the practitioners of this tool, since the market likes it so much. According to them, statistically, pullbacks most often occur at levels 38.2%, 50% and 61.8% those Fibonacci retracement levels. If price broke through those levels, it could very well be a trend reversal. But technical analysis is not science, so we will always deal with probabilities. In the case of Fibonacci, pullbacks are identified like this: As you can see, each pullback tests a certain level before reversing further along the trend. And this repeats itself. But if price were to confidently break through these levels one after the other, that would indicate a long-term reversal. 🔴 Reversal: Pivot Points Another method of determining the reversal is the use of the pivot points. In an uptrend, the lower support points (S1, S2 and S3) will act as conventional levels, breakout of which can indicate a change of trend, but not a reversal. And vice versa for resistance points (R1, R2 and R3). Breakdown of these levels is another hint to a reversal. 🔴 Reversal: Trend Lines Trend lines are generally an elementary method of determining if a trend has changed or if it is a pullback. If you combine trend lines with candlestick combinations and price action patterns, you can get really impressive results. 🔴 Reversal: Price Highs and Lows Finally, my favorite method for identifying pullbacks and reversals is to use the basis of Dow theory: price lows and highs. The simplest technique for this is described by Martin Pring. Pring gives the simplest explanation that improves the basic understanding of any market. 📊 Market condition of price As you can see, using simple techniques, we can build up practical decision options for determining whether price is reversing or going further along the trend. Trends, pullbacks, and consolidation are the three pillars of any market. I also advise you to be extremely attentive to candlestick combinations in reversal zones, whether it be trend lines , pivots , or other tools. Study them. Keep screenshots. Look for them on the history. Do not be lazy. This is the only way to learn, over time, to better identify price behavior. At some point, you will feel it on an intuitive level. But this is just a continuation of your trading practice, which has moved, after many months of practice, to a new level. Experienced drivers don't think about when to squeeze the clutch and when to change the gear stick. Not only that: they can even feel the dimensions of the car. Seemingly unbelievable thing: you are inside and you feel that there is 5 cm from the bumper to the sidewalk. In trading, you just have to reach a similar level of intuitive perception based on hours of theory and practice. Therefore, the specific instrument is not so important. Much more relevant is your level of proficiency in it.
Education
by DeGRAM
6
American Trading SessionThe American trading session is considered the largest in terms of volume and strength of market movements. All this is connected with the American economy, which is larger and stronger than the economies of other countries. The ability to correctly identify and use market fluctuations in the American session will help everyone earn a lot and quickly. The opening hours of the American trading session in New York are from 8:00 to 17:00. The largest financial platforms in New York and Chicago create the main activity of the American trading session. Trading sessions At 9 o'clock in New York, the largest market in the world opens - the New York Stock Exchange. At this time, the giants of the financial world come into play and the market is gaining momentum. An hour later, another major exchange opens, which is called the commodity exchange, the Chicago Mercantile Exchange. Due to the overlap of the two sessions of London and America, there is a lot of activity and a lot of volume at the beginning of trading. High activity is observed almost throughout the entire session and stops when the offices of financial giants close in New York. After about one hour, the offices in Chicago also close, marking the end of the session. Assets With the opening of the American trading session, trading begins on large platforms in the USA, Mexico, Brazil, Canada. In Canada, during the American trading session, trading opens on the TSE and CSE exchanges in Toronto, ME in Montreal. At the same time, trading starts on the Mexican Stock Exchange BMV. During the American trading session, the largest Brazilian exchanges also begin trading: Bovespa in Sao Paulo, as well as BVRJ in Rio de Janeiro. During this period, key indices are traded: NASDAQ is a group of stock indices of five thousand companies listed on the exchange of the same name. XAX is an index traded on AMEX and reflects the dynamics of stock prices and depositary receipts of all companies traded on the exchange. The Dow Jones is one of the largest indices in the United States, including securities of organizations in almost all industries, except transport and utilities. The S&P 500 is the stock index of the 500 largest companies on the NYSE and NASDAQ. S&P/TSX is an index of high–capitalization companies whose securities are traded on the TSE. Mex IPC is a Mexican stock index that includes securities of 35 large companies traded on the Mexican BMV. BOVESPA is a Brazilian index based on the securities of 71 large companies traded on the exchange of the same name. Thus, the American trading session takes place during the work of the world's largest exchanges, where most of the most significant stock indices are traded. Currency pairs The pairs that include the currency of one of the countries of this session have the greatest volatility during the American session: Pairs with the US dollar: AUD/USD, EUR/ USD, GBP/ USD, NZD/ USD, USD/BGN, USD/CAD, USD/CHF, USD/CZK, USD/DKK, USD/HKD, USD/HUF, USD/ILS, USD/JPY, USD/MXN, USD/NOK, USD/PLN, USD/RON, USD/RUB, USD/SEK, USD/SGD, USD/TRY, USD/ZAR Pairs with the Canadian dollar: CADJPY, CADCHF The volatility of the euro–Mexican peso pair is also increasing. Features By right, the American trading session is considered the most active session among others. The main reason is the large economies of London and America, which are trading simultaneously at this time. As you have already understood, the high volatility that is observed during the American session is capable of destroying any trader's account. It will be extremely difficult and dangerous for beginners to trade at this time. The beginning of trading is considered an excellent time for scalpers, because during these hours there are strong price jumps, since strong movements can literally earn a decent profit in minutes. After 11:00, sharp unexpected jumps may occur in the market caused by the actions of large American players, often working together and trying to get maximum profit by reducing the number of players in the market after the closing of European trading. Before the weekend, during the American trading session, there is usually a pullback on the main trends, since Japanese investors do not trade, European investors leave for the weekend, and American investors try to lock in profits and not leave positions for the next week. Conclusion The American trading session is the most volatile part of the entire trading period. During this period, it is worth making transactions with caution, since powerful movements caused by large players are not uncommon. This session is best suited for scalpers due to fairly strong fluctuations within the day, when a fairly large movement can be taken in a short period. The most careful approach should be taken to assets related to the US dollar in one way or another, and, accordingly, follow the US news published mainly at the beginning of the session.
Education
by Lingrid
12
How The 80/20 Rule Applies To Forex TradingToday's article will be entirely devoted to reflections on such wonderful topics as: psychology, risk, workspace management, and analysis. 20% effort gives 80% results Many people probably heard about Pareto's law, the so-called 20/80 principle. Whether you agree with it or not, let us project this statement to the approach to trading as a technical analyst. What is the 80% result obtained with 20% of effort? I believe that only with the right psychological approach and attitude trading will give 80% of the result with 20% of effort. Hence the simple truth even a child can be taught to trade. But it doesn't mean that he/she will bring a stable and guaranteed income in the long run. I mean technically trading is a very simple thing, if not complicated. Is it difficult to find the trends according to Dow's theory? Find the right patterns on the chart according to Steve Nisson or price action methods? To delve into Elliot waves or swings to apply them in practice? All these things may scare only a beginner trader. But this article is not for beginners, it is for people who have some experience in trading. Thus, the bare technical aspect gives only 20% of the result and the rest will fall on your shoulders. The obstacle to successful trading is the trader We all can agree that the main obstacle to successful trading is the trader himself. You can distinguish an implication in favor of algorithmic trading, and a bold disadvantage in the manual trading. I would not say so, for the simple reason that it is easier for a trader to adjust to the current market situation and the process that is not included in the logic of the algorithm. But for this it must be developed a sixth sense: intuition, NOT your technical skills. By intuition and a sixth sense I mean, of course, only experience and knowledge, embedded at a subconscious level, rather than trading at random. And what are non-technical skills? It is clear that these are such basics as risk and money management, because this is the root cause of all troubles and misfortunes for a trader if he doesn't follow them. Often, during active trading, most traders have words like discipline, willpower in their minds and of course excitement, greed and pursuit of money. These are the exceptional, aggressive emotions that lead to the draining. I can't teach you how to deal with it, everyone's character is different, but you need to break down these emotions. It's impossible to make a million in a month, six or a year out of a thousand. No matter how you look at it, if you break the rules your MM you’ll get a guaranteed loss. But if you work systematically and according to the rules, you can have stability and turn over a profit. The small things we miss. It's no secret that life consists of the little things, put together in large formations. If you leave them out, in an instant they will all pile up and collapse like a snowball at the most inopportune moment. One of these little things is the workspace. The ergonomics of things in your room (chair, desk, device, color of curtains, view out the window) to the color of the bull candle on the chart. The little things that are subconsciously perceived every day. And it's up to you whether they will help, or vice versa, press and aggravate. Is it possible to trade successfully when there are screaming children, an un-walked dog, or an uncomfortable chair? You're staring blankly at a poisonously colorful schedule and trying to trade. It may well be that everyone has their own view of cozy and comfortable work, but what I see in this picture is a lack of focus on all levels. We need to remove all outside triggers so that nothing distracts from seeing the essence. Make hours of silence in the house so no one bothers you during that time. So, here's what gets you 80% of the results: order, discipline, deliberate action, motivation. It's not as much effort as charting. It comes to the aid of a variety of types of organization and management, once you radically put order in yourself, in your life, and you will do it always and then the results of trading will noticeably improve.
Education
by DeGRAM
8
How To Remove Doubts in TradingHave you ever wondered why do you feel uncomfortable when you enter a trade, doubt your prediction and then look at it and realize, if you had entered, here or here, everything would have worked out, but damn, something kept you from doing it? So, what could it be, why would there be such doubts before entering the trade? In my opinion these doubts may be caused by the following: ▶️ The absence as such a trading system, at least some (where and under what conditions entries are made). ▶️ No trading plan, looking at which it will be easier to work before trading, there will be past examples of successful entries, which may well affect the next one. Size of the trade. Psychologically it is easier to trade with a smaller amount risk than with a larger one. Say, you never risk not more than 3% of your capital, but you still do not feel comfortable. You should feel comfortable with the size of the trade. For example, if you have $50 000, but $500 is too much for you and it is hard to part with it? In that case work on the minimum, which is, say $100. Gradually, once again, gradually increasing its size. You trade with $100-200 per trade, move on to $300-400 risk per trade. When you trade with $100-200 per trade, the stake is small, you not afraid to lose this amount but when you increase the risk, then the problems begin, doubts begin to plague you. ✅ Doubt is the worst enemy of the human mind. So how to deal with all of this? Trade an amount that you can afford to lose comfortably, gradually increasing it as confidence grows. Sum that you are afraid to lose can lead to a lost capital, because there will be a great desire to restore the figures on the screen. There is a concept in trading - "Turtle trader" - which implies that you have to grow slowly in trading. Believe in yourself and in your trading system. Make notes on previous trades, where it is better to enter and where it is undesirable, history repeats itself. An important point, do not trade when you are upset about something, or just not in the mood, when you are tired. When you trade, you should not have extraneous thoughts, especially negative ones. Read a book on psychology, for instance, relax, or trade on a demo if you really want to trade. To sum up When you experience self-doubt, don't make the situation worse. Everyone experiences doubts. This is normal when trading in such chaotic markets. If you are a novice trader, take comfort in the fact that your doubts will subside once you have honed your trading skills and gained trading experience. If you're an experienced trader, it may be helpful to remind yourself that everyone has slumps sometimes. You'll regain your strength if you keep trading. The key to success is to remember that insecurity usually leads to stagnation.
Education
by DeGRAM
6
European Trading SessionHello everyone! Today we continue the review of trading sessions on the forex market. The European Trading session is next in line. Let's get started! The European trading session is considered the most volatile of all. The main reasons for high volatility are the coincidences of the opening of the session with the work of the Asian session, in addition, the European session closes during the opening of the American stock exchange. It is at this time that 5 major financial platforms are operating – the exchanges of London, Frankfurt, Paris, Luxembourg and Zurich. Trading sessions Zurich, Frankfurt, Paris, Luxembourg are three major trading platforms that open at 2:00 New York time, while the London Stock Exchange, the main trading center, opens at 3:00. The opening time of trading in Europe is considered to be from the beginning of work in London, since it is on the London site that 30% of all transactions are made. The largest companies and banks enter trading on the London Stock Exchange at about 4:00 New York time, so at this time there is the greatest volatility. Opening hours The period of such activity lasts about 2 hours, after which the activity of traders decreases and it is lunchtime in the offices. With the opening of trading in America at 9 o'clock, a new momentum of volatility begins in the European trading session. The activity will last about two hours, after which it will gradually fade due to the closure of the Frankfurt, Zurich, Paris and Luxembourg exchanges. Stock Market assets With the opening of the European session, trading begins on the largest exchanges in Europe: the London LSE, the Austrian WBAG, the Berlin, Munich and Hamburg stock Exchanges in Germany, the Irish Stock Exchange, the Italian ISE, the Spanish BM in Madrid, the Swiss SWX, the Stockholm Stock Exchange in Sweden, as well as groups of pan-European exchanges Euronext and OMX. During the work of the largest exchanges in the European session, the fundamental European indices are traded: Euro Stoxx is a group of indices of 600 companies of different capitalization levels located in 18 Eurozone countries. FTSE – index of securities of the 100 largest companies traded on the London Stock Exchange CAC 40 – Euronext Paris Blue Chip Index DAX – index of securities of 30 companies with high capitalization of the Frankfurt Stock Exchange IBEX 35 – blue chip index of the BM exchange FTSE MIB – index based on quotations of 40 largest companies on ISE OMX STKH30 – Swedish index of securities of 30 companies with the largest capitalization traded on the Stockholm Stock Exchange SMI – stock index of the 20 most liquid companies of the Swiss Stock Exchange The MOSBIRZHI Index is a Russian index of shares of 50 companies belonging to the blue chips of the Moscow Exchange, calculated in rubles. RTSI is an index of shares of the 50 largest companies on the Moscow Stock Exchange, calculated in US dollars. Currency pairs of the European trading session During the European session, currency pairs of countries whose exchanges are active at this time have the greatest volatility. Currency pairs with euro: EUR/USD, EUR/JPY, EUR/GBP, EUR/AUD, EUR/CAD, EUR/CHF, EUR/NZD, EUR/TRY, EUR/SEK, EUR/NOK, EUR/HUF Currency pairs with the pound: GBP/USD, GBP/AUD, GBP/BGN, GBP/CAD, GBP/CHF, GBP/CZK, GBP/DKK, GBP/HKD, GBP/HUF, GBP/JPY, GBP/NOK, GBP/NZD, GBP/PLN, GBP/RON, GBP/SEK, GBP/SGD, GBP/TRY, GBP/ZAR Swiss Franc pairs: AUD/CHF, CAD/CHF, CHF/BGN, CHF/JPY, CHF/RON, CHF/TRY, NZD/CHF, USD/CHF It is also necessary to pay attention to the currency pairs of the US dollar with the Swedish, Czech, Danish krona, as well as the Hungarian forint, the volatility of which also increases slightly during the European session, especially in its last hours, when the European session intersects with the American one. Features Intersecting with two sessions at once: the Asian and the American, the European session becomes very volatile during the hours of intersection. It is at this time that scalpers come into play, who earn on fast movements and sharp trend changes. Due to such high volatility, beginners are not advised to trade at this time or should at least be very careful, because one move in the European session can destroy all capital. A distinctive feature of the European Session is powerful movements and rapid change of quotes. The lion's share of movement and trends is formed when the European Trading Session comes into play. This session also features a lot of manipulations – false breakouts, probing levels and collecting stop losses. That is why it is very important to be attentive during this session and not risk a large percentage of capital. Conclusion The European trading session itself is very volatile, because it is at this time that financial centers around the world turn on. However, during the intersection of sessions, volatility increases significantly, which creates large jumps and price movements. It will be very difficult for beginners to trade at this time, because strong movements will often reach stop losses, there will be a lot of false breakouts after which they will turn around sharply. At the same time, professional traders who are able to analyze a large amount of information and are able to make quick decisions will be able to earn a lot of money. Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
8
Why Perfectionism is Killing Your TradingDo you have a tendency to perfectionism? So, the biggest question is, do you have a tendency toward perfectionism? "Perfectionists are people whose standards are very high and out of reach; they are people who are strenuous, involuntary, and unstoppable in their pursuit of an unattainable goal and who evaluate their own worth solely in terms of effectiveness and accomplishment of the task at hand." Does this sound like you? Perfectionists suffer from setting excessively high standards, fear of failure, procrastination, never being satisfied with their successes and can become emotionally unstable if their standards are not met, which can often be the case in trading; they fear competition, are not trainable, are meticulous in their way of thinking, being overly self-critical and intolerant of mistakes, and can also be prone to high levels of fear of possible failure. Fear of loss, hesitation, fear of pulling the trigger, falling into extreme frustration or anger when your trading strategy fails or when you miss an entry point, or if you are extremely self-critical of your forex trading activity, can be evidence that you are prone to perfectionism. One way to test you for a tendency toward perfectionism is to have the words "have to" in your vocabulary or thinking. 7 ways to overcome the tendency toward perfectionism So, if you have some tendency toward perfectionism, what can you do? 1️⃣ One of the most useful things and important principles to remember is that humans are prone to make mistakes (that they are imperfect) and therefore you, as a forex trader, are also prone to make mistakes (that you are also imperfect). Following this as one of your trading beliefs, as part of your mental map, can be very helpful in that it will keep your reactions to events more realistic and less emotionally intense. 2️⃣ Since you are operating in an imperfect and uncertain environment, it is crucial for you to learn to think in terms of probabilities. Interestingly, research in behavioral finance has consistently shown that people are not so effective at drawing conclusions or thinking probabilistically, which is a skill that many people will need to develop in themselves. Mark Douglas (author of Zone Trading) writes, "every trade has a probabilistic outcome that does not preclude the possibility of loss. A shift in thinking from the concept of perfection to the concept of probability will help shape trading behaviors that improve the quality of trades and response to events. 3️⃣ Try to do your best to strive for excellence rather than obsessing over being the best; set a goal to become a good trader (but not the best in the world) and focus on it. Focus on learning and improving, including understanding, you accept mistakes and learn from them. 4️⃣ Focus on your trading process, not just the outcome. By focusing on your trading process, you fence yourself off from some of the anxiety and frustration that occurs when you are too attached to your results. Try to focus on how well you're trading, not just how much money you've made or lost. 5️⃣ Train yourself to take on the challenge of trading and find enjoyment in what you do. The process of having fun along with learning is the foundation of effectiveness. By accepting this, you will also allow yourself to look at the ups and downs of trading from a different angle, and this rethinking of the situation will give you a different perception of these events, with less frustration and emotional turmoil. 6️⃣ It is important to note that being able to see forex losses and drawdowns as learning opportunities is not self-judgmental. One of the disadvantages of the perfectionist can be his negative reaction to mistakes, missteps, and his inability to learn from them. Mistakes provide us with ample opportunities to learn and improve performance, but only when we actually perceive them as such. 7️⃣ Finally, it is important to learn to accept that your personal fortune is not your own capital that you are a worthy individual regardless of your trading performance at any given time. On a fundamental and profound level, this is a key belief for optimal human functioning, a sense of happiness, and successful trading. ✅ Conclusion You won't win every trade. And that's perfectly normal. Remember that it's inherently human to make mistakes in an uncertain environment a world of perfection is out of reach; we live in a probabilistic world.
Education
by DeGRAM
10
HOW OFTEN DO YOU NEED TO CHECK THE CHARTS?How many times have you looked at the chart trying to figure out if this signal is worth taking or not? And how many times have you made a profit in such cases? You don't have to look for good trades on purpose. You just wait and react. How often you should check the chart in forex trading, as well as the reasons why our brain sees trades where there are not there (and what to do about it), we're going to talk about today. There is no need to search for trades at all. Good signals are visible immediately. Instantly. Like 2 frogs above. You do not have to look for them. You turn on the terminal, and you see everything at once. You do not guess, do not draw, do not change the scale of the chart (narrower/wider). If you do not see a signal on the chart in the first 1-2 seconds, it is not there. In general, if you know at least 4-5 techniques of technical analysis , you, if you want, will find at any time on any chart a signal in any direction. At any time on the chart, if you want you can find any signals. Impatience, desire to make money, bitterness after a previous unsuccessful trade or euphoria after a successful one all this clouds our brains and we look for the trades where there are none, proving ourselves right at the same time. The longer you look at the chart, the more trades you’ll see According to research by scientists, our brain works in such a way that the less often we encounter a familiar and familiar phenomenon, the more often we start to notice it. Think about this phrase. Once you're looking for trades, you find them. The vigilante syndrome There was an interesting experiment: in an area with high crime rates, teams of volunteer vigilantes were introduced, who reported any violations of public order to the police. At first, only serious crimes were reported. But then the crime rate in the neighborhood dropped significantly, and the vigilantes began to call the police for less important things: crossing the road in a wrong place or someone walking on the street at night, that sort of nonsense. The Phantom Menace In yet another experiment, people were shown several sets of sketches with completely different facial expressions: from frightening to totally friendly. And they were asked to choose from them the ones that looked threatening. In the beginning, people chose the most "beastly" faces quite adequately, but then the scientists began to remove them from the samples leaving more "normal" faces. And people began to call those faces that seemed harmless to them at first threatening. Why? Because they were told to SEE the threatening faces. The experiments described above clearly show that when you look for something, you are bound to find it. So do the trades on the chart. Our brain tries to match all the facts so as to confirm our point of view. And this leads to losses. The only way to combat this effect, according to psychologists is to define your goals as precisely as possible and write down specific wording. In the case of trading the cure is simple - a checklist. If a trade corresponds to all of the checklist items there is a signal. If they do not correspond to at least one you are simply bored. Practice using a demo account Naturally, having installed a new system on the char you will not see trades in 2 seconds. Any new strategy requires that you get used to it. A demo account is an excellent way to do that. How long should you get used to a new trading system? It depends on the timeframe and the frequency of trades. If it is intraday trading a week is enough. If it is a daily chart (D1), then about a month. How often do you need to check the chart? Whatever timeframe you have that's how you should check it. If D1 - once a day, if H1 - once an hour and so on. On timeframes below D1, you should limit the trading range when you are looking for signals. Checking charts at night on low timeframes usually makes no sense. To summarize: the more you look at the chart, the more wrong trades you have (they can be profitable, given the random nature of the market, but not according to the system). The best signals are visible immediately, literally in the first second.
Education
by DeGRAM
7
Asian Trading SessionHello everyone! Each trading session has its own characteristics. According to these features, you as a trader should act. And today I want to discuss with you the specifics of the Asian trading session. Working hours The Asian trading session is open from 19:00 to 4:00 New York time. Trading in Asia begins with Tokyo, the main trading center is opened, the Tokyo Stock Exchange, followed by all the major financial institutions of Japan. The centers of activity of the Asian session are Tokyo, the largest financial center in Asia. Then, in an hour, Hong Kong and Singapore open, which contributes to the increase in trading. The trading peak is reached at the opening of the European session, which overlaps with the Asian one at 2:00 New York time. The Asian and Pacific sessions coincide in terms of working hours and therefore they are often considered as one. The trading period at this session coincides with the opening hours of the largest Asian exchanges, such as the Hong Kong Stock Exchange, the Israeli TASE, the National Stock Exchange and BSE in India, the Shanghai and Shenzhen Stock Exchanges in China, the Abu Dhabi Stock Exchange and DFM in the UAE, the Saudi Stock Exchange, Singapore SGX, Korean KRX, as well as the Japanese TSE, which in many ways is the market conductor in the Asian session. Also, during this period of time, trading is underway on the Australian ASX, the New Zealand Stock Exchange in Wellington, as well as the Port Moresby Stock Exchange. Currency pairs It should be understood that during the Asian session, the Asian currency is characterized by increased volatility. Currency pairs with the Japanese yen: AUD/JPY, CAD/JPY, CHF/JPY, EUR/JPY, GBP/JPY, HKD/JPY, NZD/JPY, SGD/JPY, TRY/JPY, USD/JPY. Currency pairs with the Australian dollar: AUD/CAD, AUD/CHF, AUD/USD, EUR/AUD, GBP/AUD. Pairs with Hong Kong Dollar: EUR/HKD, GBP/HKD, SGD/HKD, USD/HKD. There is also an increase in volatility in the currency pairs CHN/USD, CHN/RUB, EUR/SGD, GBP/SGD, USD/SGD. It is these pairs that traders pay the main attention to during the Asian session. Session Features The Asian session is considered to be the calmest session, where sharp fluctuations are practically excluded, so it will be easier for beginners to trade at this time. Due to the fact that the market is closed on the weekend, on Monday, driven by the news of what happened over the weekend, the price can create strong movements and even form gaps. Asian traders form a trend that is most often supported by European and American traders. The main players during the Asian session are the Japanese Central Bank, as well as large companies. The economies of Japan and China are export-oriented, which causes their companies to be more active in foreign exchange transactions. Due to the active activity of the state in the market, which are caused by the currency interventions of the Japanese Central Bank, significant deviations of the Yen can be observed, and since 16% of all transactions in the market take place with the participation of the Yen, this also affects other currencies. Conclusion It should be understood that most of the time the market is influenced by the state, which by its actions (interventions) pushes the market and creates a trend. That is why news monitoring, tracking the economic indicators of the Asian region, greatly help to predict the future movement of the market. The Asian session is the quietest trading period, the most suitable for training beginners. Strong jumps are quite rare, while trends are often replaced by strong sideways movements. Volatility during the Asian session is considered to be the lowest, which makes it the least convenient for scalping strategies and the greatest for technical analysis. Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
15
Trading BooksI can say unequivocally that without reading the trading book in this market you can't go far. People who do not develop will eventually end up with nothing. The well-known argument what is better, books or practice, makes no sense they are parts of a single coin. The question of "what to read" is also abstract. There is plenty of meaningful reading. Except that I would advise not to bury yourself especially in books about the stock market, if you work in the Forex market, for example. The candles are different there (daily gaps between sessions), and it's a different world. Don't skip books about trading psychology. They are often fascinating and your brain will rest after looking at the charts all day. Practice on the charts. Read again. Work through them again. In parallel, work with a live chart. That's how you slowly become a trader. Always keep in mind the main thing whatever is described in the book, it is only a particular view of one author and there are thousands of such views. What you need is a personal, individual approach to the market. If trying to copy or adopt someone else's style of trading you will not get far. You can only trade by being yourself. And to become a self-sufficient trader, you must break through the mind of someone who's been in the market for decades. Take from them what suits you psychologically and create your own. Only yours that you will then not be able to pass on to anyone. What books to read This is a very popular question. There are a lot of books to read. Books on technical analysis; Books on psychology of trading; Books and articles about price action. Your task, averagely, is to get at least a general idea about trading at first. Therefore, read about the basics of technical analysis: Reuters. Technical Analysis for Beginners. The basics of candlestick analysis: Steve Neeson. Japanese Candlesticks. Chart Analysis of Financial Markets Gregory Morris. Method for analyzing stocks and futures Psychology: Mark Douglas. Trading in the Zone. Edwin Lefebvre. Memories of a Stock Speculator Sometimes a whole book is worth reading for the sake of a single phrase that can sort out the mess in your head. How to Read a Trading Book Most books, as you know are easier to find in electronic form. Personally, I read mostly in electronic form on my MacBook and iPad. Why is it convenient to read on the laptop exactly the trading books? Well, you can immediately open the chart, practice what you read, plus write down the appropriate thoughts in your electronic diary, take screenshots. An alternative method is print the books you want on a laser printer. Some people get it at work and others buy a simple laser printer at home. You can buy the least expensive model and print thousands of pages. It is not difficult to staple them and your eyes will be less tired (although I am more than satisfied with the apple screen). Likewise, a good e-reader like the Amazon Kindle or Pocketbook. No one owns the market. Hence the logical consequence there is no grail, no secret mathematical formula or method of guaranteed prediction. Not in any book or course. Not a single indicator. Not one candlestick pattern or price action pattern. No teacher on the planet that "knows the market." No guaranteed signals that make you feel good. There aren't any. There is only mathematical probability and all the traders in the world are learning to "tilt" it slightly in their direction, reducing losses and increasing profits. The market is a zero-sum game. Money constantly moves from one hand to another without ever sticking around. Many hedge funds last 3-4 years and disappear. Now you made a million, tomorrow you gave 2, the day after you made 4, lost 5, went bankrupt, came back again, etc. Books allow us to learn a lot of these stories. Thousands, tens of thousands of author's views are what trading books are all about. Not a guarantee, not some special way to suddenly become a unique forecaster by reading it.
Education
by DeGRAM
7
Stability In Forex TradingWhy so few traders manage to bring their trading to the level of stable earnings, when trading becomes a source of income, and not a source of constant disappointment? Because before you start to get the "easy" money that everyone comes to this industry, you will have to go a long way to make a lot of mistakes, each of which will cost you money. To fall down many times and get up more times, to lose money at the same time without losing the motivation to move forward, to learn yourself and change your attitude to trading. In addition to all of this, the difficulty is that no trader knows how much time it will take him. And the truth is that 95% don't have the strength and patience to do it. I can point out 3 main criteria for stable trading: The right attitude to losing trades. Confidence in your strategy. Availability of trading rules and most importantly the desire to follow them. 1. Accepting losses. To survive in this field, a trader has to learn to properly deal with losses, without that he will not be able to make a profit in the long run. Just like in sports, first you learn how to fall properly, then everything else. The thirst for quick money, which is present in almost everyone at the initial stage, generates fixation on profits. With this attitude the trader becomes highly vulnerable and morally unprepared to accept and tolerate losses. Nobody likes making mistakes and losing money. And large losses cause a lot of stress, which can lead to emotional burnout, depression and even deprive the strength to continue trading. Trader's dependence on the expectations of the result of each deal will invariably make him experience emotions. And emotions will push him to make erroneous actions. These constant emotional swings take away the trader's strength and leave him with no opportunity to improve his trading. He's busy just trying to keep his mental balance somehow. How do most traders try to solve this problem? They try to avoid losses and fight their emotions. But that's impossible, you, see? This is a vicious circle. What you can and should do is to shift your attention from the result of each trade to the result of a time period (for example, a month). It is very important to understand and accept that: in any sequence of trades, there is a random distribution of profitable and losing trades. This will help reduce the emotional component of trading. When you do not expect any result from a trade, the result of the trade ceases to matter and causes emotions that push you to take the wrong actions. The trader's job is to make his trading as psychologically comfortable as possible. 2. Strategy A strategy is a method. Most traders, having suffered another failure, begin to change their trading strategy or look for another one. They sincerely believe that the problem is in it. That it is the strategy which does not let them to earn profit. But there are no profitable or unprofitable strategies. Traders make them so. In fact, a strategy is not supposed to provide a trader with profit. It has only one function. It should provide trader's understanding of WHAT, WHERE and WHEN to trade. And the sooner the trader stops shifting responsibility from himself and his actions to his strategy, the faster he will learn. It will take time for you to feel confident in your strategy. Time to adjust the method to yourself, to your understanding of the market. You can take any strategy you like as a basis and taking into account your weaknesses and strengths determine how and what you will trade. 3. Compliance with rules The third and perhaps the most important criterion for stable trading is the presence and observance of rules. This is what will bring the trader profit in the end. Trading rules have only two functions: To provide a trading strategy with a positive mathematical expectation. Provide correct models of trader's behavior in different trading situations. So that it is possible to control emotions and not to leave the psychological comfort zone. When successful traders are asked what is most important to achieve success none of them focuses on their strategy, they do not talk about the magic money management or special knowledge. But all of them say that it's important to follow their rules in a disciplined manner. All traders who make money fanatically follow their rules. Because they know that strict adherence to trading rules is what makes them profitable. The market pays us money for our disciplined actions. We pay it for experience and it pays us for discipline. Most traders are mainly busy analyzing their trades and forget about their own behavior and trading mindset. The desire to follow the rules arises only when you realize that they reduce your losses, which automatically increases your profitability. Unfortunately, there is no ready algorithm for creating rules. They are individual, and that is the difficulty of learning to trade. The only guideline in their creation is that they must LIMIT your losses. Everything else is up to you. Learn to listen to yourself by methodically and persistently striving to improve your trading. If you give yourself time to learn first, setting aside the desire for instant results, you will definitely come to have your own trading system sooner or later. An individual system which will bring you money.
Education
by DeGRAM
21
Winning Trader is Patient TraderHello friends, like every forex trader on Earth, I sometimes ask myself what are my strengths and weaknesses? How have I changed, and what qualities have I developed in myself? Today we're going to talk about how you can develop it. How susceptible are you to impatience? Impatience in ordinary life. But what does it mean to be able to "delay making a decision"? For me, it means handling things calmly and being disciplined. I don't have to do rash things right away and can bide my time for action. This is equally true for trading as it is for real life. Wait until you get a good discount for something you've wanted to buy for a long period of time. After all, there are many things that seem to be needed, but their purchase may well have to wait until the seasonal sale. This behavior, also called "delayed gratification," protects me from making hasty and emotional decisions. I would not be satisfied if I bought something recklessly, only to get the thing right away but pay a high price for it. My focus is on the risk/reward ratio. So, the risk of making a bad decision is relatively low. I think it's not easy to just wait it out these days. The sensitivity to consumption and the wide variety of offerings makes it difficult to refrain from buying something right away without waiting out the right situation. Due to the ability to pay in installments, people are able to buy expensive items right away. Many people spend money on rash decisions and get into debt just because they can't wait. Several years ago, I read Daniel Goleman's book “Emotional Intelligence”. Among others, he described long-term experiments with children who became particularly successful and incorruptible if they learned at an early age about delayed decision-making. The essence of the experiment was this: a child was offered a candy and told that he could eat it now, and if he didn't eat the candy right away, but waited twenty minutes, he would get two candies. So, those children who agreed to wait, then in adulthood were much more successful than fans of "fast" candy. What does this mean for the trade? I think delayed gratification has several positive effects on trading. You have to wait out the right situation and you have to refrain from recklessly entering the market. You must wait for the perfect set-up that will execute according to all the rules. You should not take profits too early, and should calmly wait and close a position only when your rules allow you to do so. You must be firmly aware of when you should not trade and when your individual trading strategy will not be profitable. You must control your risks to stay in the game. You must know that you can only succeed in trading in the long run and that you cannot get rich quickly. Nowadays, I have begun to notice that I am primarily looking for reasons NOT to enter the market. It is only when there is no reason to trade that I open a position. The market no longer pressures me, and I try not to be influenced by my emotions. I have to wait for the right setup and the right conditions. The emphasis is on first-class odds, not second-class and beyond. All you have to do is wait it out. Another point that is never talked about. It's pushing through situations. Here's an example: you have an open position and it has reached a stop loss. You want to win back, and at the next signal you enter the market with bigger lot position. Again, you take a loss. You follow your emotions and open in the same direction with an even bigger lots, without even waiting for your strategy signal. You probably already know the end of the story. This is a push-pull situation, when you're trying to have some kind of impact on something you can't influence. Exercise Instead of describing any self-evident conclusions from the above, I offer you a simple exercise, which allows you to understand whether you have developed the skill of waiting or not. Take an hourglass, for 3-5 minutes (no less), turn it upside down, and just watch the grains of sand pile down into the empty half of it. Your task is to wait until the last grain of sand falls down. Do not try to control your thoughts. So, after you've completed the task, remember what thoughts and emotions you had while you were watching the sand? If you were starting to get mad at how slowly the sand is falling away, you were trying to figure out how much time is left, you were cursing to yourself about this "stupid task" that doesn't let you see pictures of cats, you were remembering how many important things you have to do today, or even failed to wait until the sand falls to the other half of the hour congratulations. You have a problem with patience. But if you calmly waited for the last grain of sand, you had no desire to speed up the process in any way, you just watched the sand until the very end without emotion or irritation. You don't have a problem with patience, at least not obviously.
Education
by DeGRAM
14
Divergence in TradingThe essence of divergence is very simple: The divergence of price and indicator movements. When price updates higher highs and the oscillator updates lower highs, it is divergence in its classic form. It could be stochastic, RSI, MACD, CCI and hundreds of other oscillators. Some traders believe divergence is the only oscillatory signal worth looking at. From stochastics creator George Lane to Alexander Elder, hundreds of professional traders have described divergence in their books. What is the essence of the divergence? When the price reaches its maximum value, the oscillator should reach it too. The same is true for the minimum values. This is how it works in a normal situation. If the oscillator and price decide to mark different values - we're talking about divergence. It can be used in two main cases: conventional divergence; hidden divergence. Let us now analyze them. The classic divergence The simplest and clearest signal, which hints at a future trend reversal. If price makes a lower low and the oscillator makes a higher low, we have a traditional bullish divergence. In other words, if the oscillator is up and the price is down, that is a hint of a reversal of the price in the direction of the oscillator. The opposite situation is also true. The trend is going upward and the price is updating the maximums and if the oscillator is not then it’s a divergence. The optimal use of divergence is on the maximum and minimum values of the price. This is the easiest way to find the reversal zone. The oscillator directly indicates that the momentum is changing and although the price keeps updating levels, it will not last. We have considered the conventional divergence, now let's look at its evil cousin, the hidden divergence. It is not so secret that it is just a divergence hidden within the trend. Hidden divergence A divergence does not always indicate a trend reversal. Sometimes it is, on the contrary, a clear indication that the trend will continue. Remember, you should be friends with the trend, so any signal that the trend will continue is a good signal. Hidden divergence is quite simple. The price updates the upper low and the oscillator updates the lower low. It is easy to see. When the price has updated the maximum, check if the oscillator has done the same. If it doesn't and goes in the opposite direction, it's a divergence. And there is the hidden bearish divergence. The price updates lower highs on a downward move and the oscillator, on the other hand, it is trending upwards and updating the higher highs. If the general trend is downward, it is an indication that this trend will continue and quite possibly double its efforts. How Use Divergences Properly? Divergences are a great tool. However, it often raises the question of when exactly to open the trade so that it does not happen that the trade is opened too early or too late. For this purpose, we need a confirmation: some method allowing us to filter the false entries in the divergence. We will consider several such methods. Oscillator crossing The first thing we usually look at is a trivial crossing of oscillator lines, say, stochastics. This is an additional indication that the trend may soon change. Therefore, when the price approaches the upper or lower zone, the crossing can give a good signal. Patience and confirmation of signals are the main qualities of a trader. Divergence is a great tool, but you need to confirm it with additional tools to achieve really good results. Oscillator exits the overbought/oversold zone Well, we took our time and waited for additional confirmations of the divergence. Strong enough to indicate a reversal of the trend. Which ones? Remember the basics of technical analysis. A trend line would show that the trend is steadily descending and it is too early to enter the reversal. This technique is very valuable for finding a reversal or breakdown of a trend line. If the price bounces from the trend line, draw it for the oscillator as well. 8 rules of divergence To use divergence successfully, it is advisable to adhere to the following rules. 1. The minima and the maxima The following conditions are necessary for divergence price updates higher highs or lower lows; a double top; double bottom. When the price updates these highs and lows, there is a trend and this is the feeding ground for divergence. If there is no trend and all you see is a consolidation, the divergence can be missed. 2. Draw lines between the tops The price is in only two states: trend or consolidation. Connect its tops with lines in order to figure out what is going on. If one peak is lower or higher than the other, it is trending and the market is sweet and available for trades. If there are no clear new highs and lows, it means that there is a consolidation, and divergences do not play a significant role in it. 3. Connecting the tops Let's be more specific. The price reached the new maximums? Connect the tops. If it made lower lows, connect them. And don't get confused. A very common mistake the price makes new highs and the trader connects the previous lows for some reason. 4. Just watch out for overbought and oversold. We have connected the tops with trend lines. Now we study the oscillator readings. Remember we are only comparing highs and lows. It doesn't matter what the MACD or stochastic is showing in the middle of the chart. What difference does it make? It makes no difference. We are only interested in their boundary values. 5. Connect the highs and lows of both the price and the oscillator If we have connected the highs/minimums of the price, we have to do the same for the oscillator. And not somewhere, but for the current values. 6. Watch the angle of slope of the lines. Divergence when the angle of lines for the price and the oscillator is different. The more this difference, the better. The line can be upward, downward or flat. 7. Don't miss the moment If you notice the divergence too late and the price reverses, it means the train has already left. The divergence has worked out, it will not be relevant forever. The one who missed it is too late. Wait for the next price divergence with the oscillator and a new divergence will not keep you waiting. 8. Longer timeframes Divergence works better on higher timeframes. Simply because there are fewer false signals. That's why it's recommended to use them on 1-hour charts or more. Yes, some people like 5- and 15-minute charts, but in these timeframes, divergences often lead to false ones. These are the rules for dealing with divergence. It's a cool tool. If you specialize on it, it is one of the most powerful methods of technical analysis. Certainly, you will need practice and a bottle of good wine to understand all its peculiarities.
Education
by DeGRAM
10
Trading on a demo accountHello everyone! Today I want to discuss a topic that worries everyone: to trade or not to trade on a demo account. The demo account itself is a useful tool, but it also has a couple of disadvantages. Let's deal with everything in order. Advantages of a demo account Perhaps the most important plus is that you do not need to deposit your money into the account. The demo account is created for training, and you can use it for free! There are no risks and you will not lose your money. The ability to test your strategies. Thanks to a demo account, you can try to trade your strategy in real time on a real market and understand whether it works or not and whether you are able to follow the rules. The experience is priceless, and you can get it thanks to a demo account. You can open demo accounts as much as you want and trade all day long, filling your hand on the real market. Thanks to the demo account, you can try all the free indicators and understand which ones are suitable for you and which ones do not work at all. Disadvantages of a demo account Perhaps the most important disadvantage is that you will definitely behave differently than on a real account. Psychology is not to do anywhere and when trading for real money, you will immediately notice it. There is no tension on demo accounts, because you will not lose your money, but as soon as the question concerns your real money, you lose your head. In addition, transactions are executed instantly on a demo account, this is not always possible on a real account, because there is slippage. Because of this, strategies that were profitable on a demo account may be unprofitable on a real one. On demo accounts, traders choose the maximum deposit and trade the maximum lots . With an infinite deposit, it's hard to lose all the money. In real trading, the account is usually always smaller and therefore you need to trade a smaller lot, which is not so easy. Spread. A narrow spread on a demo account is a feature of brokers trying to attract as many clients as possible. In real trading, this parameter will be wider. The number of transactions. On demo accounts, traders tend to execute a much larger number of orders than they actually need. This habit is transferred to real money. But it is much more important to approach the evaluation of each transaction carefully and chase not the number of orders, but their quality. Conclusion A demo account is certainly a very useful tool for a trader. But you need to approach the matter wisely and understand the difference between a demo and a real account. Practice trading on a demo account the same way as if you were managing real money and then the benefits will be much greater. Good luck! Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
10
Environment Dictates PerformanceHello, fellow Forex traders! Successful trading on the currency market is not only about having a trading strategy that suits you, emotional composure and risk control. Your work environment, where and how you trade, also plays an important role. So, what should be a trader's workplace? A computer You don't need super powerful hardware for the trading terminal. But when all of your programs, including the terminal, work quickly, nothing hangs and the computer does not "freeze", if you suddenly decide to take your mind off the charts and watch videos with cats on youtube, it's quite pleasant and comfortable. And it does not disturb your emotional state. And you still need nerves. If you trade on a desktop PC, I advise you to keep a laptop nearby. Since the electricity can theoretically cut out at any time, and the laptop runs on battery power - at least to close the position you will have enough charge. Monitor It is better if it will be large. 19-24 inches. It's just more comfortable. A lot of monitors, as in the movies about cool traders, you do not need, believe me. At least it will not make you trade better directly. But you will be able to watch a movie, play a game and trade Forex at the same time. Internet The faster, the better. Also, you need to think about what you will do if it suddenly turns off. "Backup plan" can be either pre-internet from another provider (just pay every month for 2 networks), or a 3g modem, or a modern smartphone, such as iPhone, with a modem function (more than once helped me out). Chair The spine is directly related to brain function, headaches and overall human health. So do not skimp on normal computer chair. You will get a hundredfold return of the money spent and you'll save your health. Printer Printer/scanner/copier. You probably saw these hybrid devices at offices of different companies. Buy one of these and you can print out charts, use pens to draw on them, scan them back into your computer, make yourself important data posters, etc. Printed out charts with examples of difficult situations, tables with lot sizes for positions, examples of shapes, new rules to implement in the TS are very helpful in your work. Try it. But most importantly, try not to mix work and personal life. If possible, it is better to allocate a separate room for trade, or even rent an office (for those who do not have problems with money). This way you will not be distracted by anything, and you will not disturb anyone.
Education
by DeGRAM
10
ARE YOU A GAMBLER OR ARE YOU A TRADER?Hello everyone Today we will touch on a serious topic, at the end of which you will be able to determine who you are in the market. Let's go! Two types of people There are a large number of people in the forex market and they are all different. But, even considering the diversity, there are still common features by which people can be divided. Some come with a desire to earn quickly, while spending not much time and effort. Others come to the market as a job. The first are simple players, mostly they lose money and eventually leave with nothing. The second are professionals. They know how to trade, they follow the rules and their discipline is at the highest level. How to determine which group you belong to? There are a couple of factors that distinguish an ordinary player from a real trader: 1. Risk management. The player, as a rule, does not follow the rules of risk management. The player's risk is equal to his capital. That is why players lose all their capital. Real traders rarely risk more than 1% of the capital. Such traders follow the rules of risk management in EACH position. Therefore, they never lose all their capital. 2. Trading plan. Players have not tested strategies and rarely study them to the end. They superficially learn new trading methods and run to the market to use them and therefore lose everything. Professionals know everything about their strategy, when to open, when to close, why and how much. A professional will have an answer to all questions and will have a plan. 3. Emotions and money. Do you trade for emotions? Do you like roller coasters at the market? If the answer is yes, then you are a player. Players come to the market to experience the full range of emotions and the market gives them this, but takes money in return. Professionals do not experience emotions, they are here to earn a living. Chasing emotions is not for them. 4. What do you want or what do you see? The player trades what he wants from the market. A player may see something on the street or some news and now he wants to open long positions without paying attention to the context of the market. A professional is not set up to trade long or short, he is set up to trade what the market is trying to show. If the market shows signs of growth, a professional will open long and vice versa. There are no desires here, there is only a plan, strategy and discipline. Conclusion Everyone should answer these questions to understand who they are in the market. Having defined yourself, you will be able to improve yourself, admitting mistakes is already half the case. This article also indicates the further path that will help you from an ordinary player to become a professional trader. Good luck! Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
14
Dietary Supplements For TradersLong sitting at the computer, constant stress, bad ecology in the cities, unbalanced nutrition all this is detrimental to the health of forex trader, as well as any intellectual worker. Today is not going to be a typical post. We're going to talk about supplements that help improve mental and physical vitality under emotional pressure from the market. I will share with you those remedies that I myself use. What are dietary supplements? Nutritional supplements are supplements, usually based on natural ingredients. They are not medicines, but act similarly to vitamins. There are universal nutritional supplements, and there are specialized ones for bones, brain, heart, etc. Consider dietary supplements not as something magical, but as a kind of bonus, "+1 to HP", if we put it in computer game terms. There are opponents of supplements, there are supporters. Personally, I have tried various supplements for many years, and below is a list of what I think are the best. Of course, it all depends on the individual, for example, I have problems with the stomach and cervical spine, so, let's say, joint supplements for the average person needs less than I do. Try to try everything on your body, diseases (if any) and preferences. My experience is just my experience, not the fact that what works for you is what works for me. Omega Fatty Acids Omega-3, omega-6, omega-7, and omega-9. These are all varieties of fatty acids found in foods such as fish, nuts, some fruits and vegetables. Omega's are healthy bones, immune system, breasts, cardiovascular system, intestines and pancreas as well as improve memory and brain function. I recommend unconditionally to all. I myself have been drinking for many years. Omega-7 is generally rare, and here it is in a complex, perfectly balanced, also containing astaxanthin - the most powerful antioxidant in the world. Cordyceps I use it when I need a lot of energy. When flights, busy days. This is a parasitic fungus that sucks the life juices out of insects that it encounters: grasshoppers, ants, etc. In China, cordyceps has been used medicinally for 5000 years. In addition to energy, it stimulates brain activity by improving blood circulation, strengthens the walls of blood vessels, as well as the immune system. Unfortunately, there are a lot of fakes, be careful. One rule of thumb - cordyceps can't be cheap, as very little of it is extracted. Ginseng Ginseng has long been known for its healing powers. Unlike cordyceps, it gives a deeper energy, not so pronounced, the effect is noticeable a little later. In addition to physical energy helps with mental fatigue. In dietary supplements is usually used artificially grown ginseng, as it is cheaper. Wild ginseng is considered more powerful, I can't recommend any particular supplement, so please try it. If you feel the effect, it means that it is suitable for you. Now I take this one. Ginkgo Biloba Ginkgo Biloba is the plant whose leaf extract is closest to those "NZT pills" from the famous movie " Limitless ". It nourishes the brain, improves memory, attention, mental performance, and slows the aging process of the brain. Result is not instant; miracles is not going to happen. Garlic. Garlic kills a lot of pathogens inside the body, a couple of times a year I take a course. What is interesting, everyone knows about the properties of garlic as an anti-cold and immune boosting agent, but it also helps to reduce cholesterol and improve male potency. Garlic is a dietary supplement in a concentrated form and in large quantities. This will not make your breath stink. Hyaluronic Acid Hyaluronic acid is a constituent of many tissues in our body. Hyaluronic acid is commonly advertised as an anti-wrinkle cosmetic, for younger looking skin, etc. But it is also excellent for joints, muscles and ligaments. Scientists are predicting that in the future, this acid will form the basis of cancer fighting agents. In this way, it is an excellent remedy for the mobility of the joints and has an aesthetic effect on the skin. Blueberries Although modern monitors don't strain our eyes as much, there's still nothing good for vision in the glowing screens of laptops, cell phones and tablets that we all often look at. And it doesn't hurt to take preventive care. Blueberries are very good for vision. And in combination with the substance Lutein, the effect is enhanced. I try to remember to take a course of blueberry extract with lutein once a year to prevent good vision. Calm You also need to drink a soothing magnesium-based mixture. It promotes better sleep and relieves stress, of which there is so much in a trader's job. I drink it at night. How to use supplements? The most important rule is not to overdo it. Make sure that you do not overdose on any components/vitamins. For example, if you drink something with vitamin E, you should not take a supplement at the same time, where vitamin E is also present, albeit as an auxiliary component. Also, watch your own well-being. What works for one person won't necessarily work for another. Conclusion Various supplements help, but they are not a panacea. If you have, God forbid, any diseases, be sure to see a doctor. Also, supplements work many times better when you combine them with physical activity. Yes, that's right: you have to get off the couch and go to the gym. Choose what you like: yoga, aerobics, tennis. It's your business, but physical activity has to be, without it there is no way.
Education
by DeGRAM
44
Winrate and risk reward ratioHi everyone. In the pursuit of success in forex, traders tend to focus on finding a strategy that gives the highest accuracy of entry. The pursuit of perfectionism in trading blinds their eyes and does not let them see the "forest for the trees". So, what are you missing out on? What important detail is missing from your trading plan? The profit/risk ratio is your advantage. In this article, we will look at how you should calculate your risk-to-profit ratio for your working trading system. A Forex trading system should include a well-defined equity management system that is easy to follow. Money management is one of the most important aspects of any trading strategy (TS) today, but most traders neglect the whole concept of money management in their trading. Most forex traders want to focus on the entry points provided to them by their trading systems. Their dream is to find a TS that gives a buy entry signal at the lowest point on the chart and a sell signal at the very top! The entry point is undoubtedly important. But do not forget that at the moment of entry, we can create an advantage not only in the exact entry into the trade, but also in creating a favorable statistical expectation. Specifically, by putting a good profit to risk ratio into the trade. Trading is a game of probability. We know that in N% of trades we will lose and that in X% of trades we will win. But we need to remember that we can easily improve our stats by simply ignoring trades where the profit potential does not exceed the potential loss by at least a factor of two. It is the presence of money management in your trading strategy that reduces your losses and makes you hold on as a winner. I say "makes you" because you have built into your trading system a certain percentage of profitable trades, the knowledge of which will screen out your emotions in the process of trading. Applying this simple money management system will give you a general idea of how to propel your trading exponentially forward and in a positive way. In this article, I will explain how, by developing your trading system, you will determine the size of a position before you open it. Please remember that these are the basics to help you think properly. The exact calculations, specifically for your strategy, you will need to do on your own. "We've all heard the famous trading axiom: cut your losses, and let the profits run. This is the aspect of money management in your trading system that produces big winners. Money management puts aside the subjective feelings that are present in people. " Richard Dennis “I'll say it again: I never made my money by trading; I made my big money by waiting and letting my profits grow." Jesse Livermore The first aspect we have to understand about our trading system is that our system gives us a positive expectation. We can only do that by testing, but sometimes testing can give a negative result if you forget to set a profit to risk ratio for each trade of at least 1:1.5 in the rules of the strategy. All beginners say that a forex trading system without 90% of profitable trades sucks, and they will surely develop their own holy grail to the envy of others. They are wrong, of course. In Pursuit of Perfection For all the trading systems really working in the Forex market, it is important to note that: - Professional traders are looking for performance, while novice traders are looking for perfection. - Beginner traders are looking for quick profits. Most novice traders get hung up on the number (percentage) of successful trades rather than total profits. They all buy into a system that is advertised as 90% winning. The question is, "What good is a system that provides 90% winning trades with an average win of 12 pips if you have to tolerate 60 pips of risk to achieve a win?" Do you see where I'm going with this? It's like your best friend after taking 3 karate classes is ready to fight 6 muzzleloaders in an alleyway. He's obviously going to lose) Probability of bankruptcy of a trading account as a function of the percentage of profitable trades and the profit to risk ratio. The table above shows the dependence of the probability of "losing" the deposit on the percentage of profitable trades in your trading system and the profit/risk ratio in each trade. Thus, we can see that even if your strategy works 60% of the time but the profit/risk ratio is kept at least at 1.5:1, you can already be sure that you will not lose all your money. But if the ratio of profit to risk is 1:1 with the same 60% of profitable trades, the probability of losing the deposit in a series of losing trades is 12%. A profit/risk ratio of 1.5:1 or more is the right way to think about trading. The minimum characteristics of a profitable strategy is 40% of winning trades with a profit/loss ratio of 2:1 (see the table above). According to this table, if you make 100 trades (each one following the same rules) and you have a 40% winning trade with a 2:1 profit/loss ratio, your risk of ruin would be about 14%. This is the minimum point from which the system can be considered working. What is the most important piece of information regarding risk of loss? Let me help you out. Having a high winning percentage is not an indication that you'll come out a clear winner. If you have 55% winning trades with a 1:1 risk to profit ratio, then your risk of going broke will be in the neighborhood of 27%. So, if you're trading in a similar way, in addition to that it's better to have fewer positions with higher profits! Overall, 42% winning trades with a 1.6:1 profit to risk ratio would also be a good option. That means you would take 1.60 pips out of the market for every 1 pip you risk. For example, by risking 40 pips, you get 64 pips. If the market turns against you (when volatility occurs), you adjust your stop up or down. If your stop-losses and take-profits vary from trade to trade, try skipping trades where the profit/risk ratio is less than 1.5:1. And you'll see how your overall trading statistics will improve. Conclusion I hope this article will help you in forming and optimizing your own trading strategy. Don't get hung up on perfection, but search for and work through profitable trading patterns and profit will come to you.
Education
by DeGRAM
8
How To Lose ProperlyOne of the few aspects of forex trading where you can experience some certainty is that you will have losses. Losses are a part of trading, and one of the key differences between successful traders and the rest is not how much they lose, but how they handle those losses. Being able to lose is key to being a winner in the long run. How are you currently coping with your losses in trading? How do they affect you? What effect do they have on your performance and trading results? Let's break down three steps that can help you better manage your Forex trading losses. Step 1: Reduce losses The first step in effectively dealing with losses is " Reducing losses". It is a key aspect because if you get this step right, you will have to use step 2 and 3 less in the future. The first step can be seen as a kind of "disease prevention". There are three aspects that will help you reduce your trading losses and have an impact on how you deal with them. 1. Reduce your losses When I talk about reducing your losses, I do not mean trying to reduce your losses per se, as it is not realistic, I mean focusing on your trading strategy, maintaining trading discipline and reducing loss-making trades that, for example, arise from trading that is not part of your strategy and that you can therefore avoid. Losses that occur as a result of orderly trading are nothing more than losing trades that are part of the trade. Losses incurred from opening trades that go against your trading strategy, when "something seemed there" to you, can be seen as bad trading or something else that could have been avoided. In short, don't be fooled. Follow your forex strategy. 2. Reduce the value of your losses. Obviously, it all comes down to risk management again. It's important to recognize that large losses have a significant impact on our emotional state, and can often have an impact on our trading behavior, usually not in the best way, such as trying to "get back at the market. Never increase the lot size after a losing trade. 3. Reduce the mental and emotional impact these losses have on you Your reaction to losses is a factor in how you got those losses (whether you followed your strategy strictly or not), their magnitude, as well as your perception and belief about those losses. If you don't like to suffer losses, and feel that you shouldn't have losing trades or dealing with a trade where losing trades are possible, then your reaction will be very different from those people whose thinking is more realistic and who realize that losses are an inevitable part of trading, that results are probabilistic and that not every trade is a winning trade. Are you fully aware of the fact that losses are a part of trading? Are you fully aware of the fact that every trade is not lossless and has a probabilistic outcome? Step 2: Reacting to losing trades Knowing how to lose is the key to becoming a winner. This step comes down to how you actually handle yourself the moment you realize that you may have to accept a loss. Dealing with loss is extremely difficult, it has to do with factors such as our ego, our desire to win and our human nature of aversion to loss, and that is why the "loss reduction" phase is so important. However, even that one step in terms of accepting losses can still be difficult, even more so if we have had losses or losses before. Because of this, it would be helpful to have some strategies that could help you stay calm, focused and disciplined while in the heat. Many people are stopped or taken out of the trade by feelings of anxiety or anger. Their behavior begins to be driven by the emotions they are feeling in that moment, causing them to lose control and discipline. The whole point is to be able to manage your emotional state in real time and keep your mental faculties open to trading, as well as to be able to own yourself and keep a tight discipline. The only quick and easy way to learn how to manage your emotional state is to learn how to manage your breathing. When you are stressed, your breathing usually changes. It becomes ten times more frequent and intermittent, so you need to breathe deeper and longer. This will help you overcome the stress response and keep yourself calm, composed and, most importantly, disciplined. It also helps me to connect the palms of my hands using my fingers. This is a simple ancient Indian technique for calming the nerves. Also, taking the cognitive aspect, keep your sanity in these situations. What thoughts usually visit you the moment you execute a losing trade? "The market always goes against me." "It shouldn't have happened," etc. ... These are unhelpful thoughts because they only increase your stress level. A better question to ask yourself is the following: "What would a successful trader say to himself in a situation like this?" This may help you to direct your thinking in the right direction, and as a result affect your feelings and lead to more positive behavior. Another way to manage your mindset is to actually create some affirmations, phrases that you can repeat to yourself when you are in a situation that will probably bring you a loss, and channel your thoughts, feelings and emotions and override any unconscious and habitual reactions that you might have developed in yourself. Remember that what you focus your attention on will determine your emotional state and discipline. It can be very helpful to focus on phrases that help you concentrate on your trading process and do the right things (which is probably not easy) at the right times and for the right reasons; for example: "I'm a winner because I follow my trading plan." Step 3: Recovering from losses It's helpful to have some strategies that can help you stay calm, focused and disciplined while in the heat. At the end of your trade, take stock of your losses today. What can you do to do this? 1.Evaluate your state of mind How do you feel? On a scale of 10, evaluate your overall trading condition, with 10 being the other end of the scale, and 1 being the other end. Where are you now? 2. Evaluate and analyze the cause of your losses. What type of loss occurred - a losing trade or a bad trade? Can you learn a lesson from the trade? Is there anything you can do about it in the future? Evaluate and analyze the cause of the loss. What lesson can you learn from it? 3. Control your reactions. There are a number of ways in which you can manage your reactions to losses. On a cognitive level, you want to be fully accountable for your thoughts, your perceptions, and the meaning you give to your losses. Your losses have the meaning you give them. Loss does not mean, for example, that you are a loser. You can take a different perspective by looking at things more broadly, what lesson can I learn from this? How will I feel about it at the end of the day, at the end of the week, at the end of the month, after 6 months, after a year, after 5 years? On a behavioral level, you could use a breathing or relaxation technique, go for a walk, or do some physical exercise to help you deal with feelings of loss. Sometimes it's just a matter of time. One trading session or day can often be enough to help you get rid of some emotions, regain some perspective, and be ready to start trading again. 4. Get it together. Come back and be ready to start trading forex again emotionally and strategically. Remember your trading plan, focus on your breathing, and then act. Bottom line. If you want to learn to lose like a winner, and develop skills that will help you improve your chances of becoming a successful Forex trader in the long run, remember: - Reduce your losses: develop the ability to avoid strong reactions to losing trades, by reducing avoidable losses and bad trades; by managing position size and trade outcomes; and by developing a mindset that has a more positive view of losses. - Properly respond to your losses by directing your thoughts and focusing your attention on controlling your breathing to create a state that will enable you to conduct yourself in the proper manner necessary for orderly trading. - Learn to recover from your losses by assessing your condition, analyzing, controlling your reactions, and focusing on trading again.
Education
by DeGRAM
5
Margin callWhen there are not enough available funds in your account to meet margin requirements, the broker issues you a warning, which is called a Margin Call. Your broker automatically sends a margin call when your free margin reaches $0 and your margin level reaches 100%. From now on, it will be impossible to open new positions. Thanks to leverage, traders get leverage that allows them to open positions that are several times larger than the size of their trading account. This helps to earn much more, but losses are also growing. It is at such moments, when you hold too large a position and the market goes against you, that you can get a margin call. This will trigger the automatic closing of all stop-out positions if the market continues to move against you. An example of a margin call. You open a forex trading deposit of $4000 and use a leverage of 1:100. As we know, the lot size on forex is equal to 100,000 units of the base currency ($ 100,000). When using the leverage of 1:100, you must deposit $ 1000 of your money as collateral for each open transaction in the amount of one lot. After analyzing the EUR/USD currency pair, you decide that the price will rise. You open a long position for two standard lots at EUR/USD. This means that you are using $2,000 of your funds as collateral. At the same time, the free margin will also be $ 2000. The cost of one item when trading one lot of software will be equal to $ 10. This means that if the price drops by 200 points, the free margin will reach $ 0, the equity level will be equal to the margin used, and you get a margin call. How can margin calls be avoided? To avoid margin calls, you need to follow the rules of risk management. Before opening positions, you need to know where your stop loss will be and how much it will equal as a percentage of capital. The distance from your entry point to your stop loss should determine the size of your position and, accordingly, your risk level. Do not do the opposite: the size of your position should not determine the size of the stop loss. You may have heard that it is not worth risking more than 5% of the capital in one transaction. Trading according to this rule is, of course, better than trading without rules, but an experienced trader will still say that it is too dangerous to risk 5%. Using the 5% rule, you can lose 20% of your capital in just 4 trades, which is too much. The more money you lose, the more difficult it will be for you to return to the previous level of your trading capital. Serious drawdowns are also psychologically difficult for most novice traders. You may even start trading out of a desire to recoup and start opening even bigger positions to try to recoup your losses. But this will no longer be a trade, but a gambling game. Never risk more than 2% of your trading account in any transaction. If you are just starting to trade forex, 1% risk will be even more appropriate. After you become confident in yourself and your trading strategy, you can slightly increase the size of your position. In any case, 5% is too much for most trading strategies. Even the best traders can make 4 or 5 losing trades in a row. If you want to trade using large lots, you must have the appropriate amount of capital. This is the only safe way to trade for large amounts. The number of positions you open at the same time determines your risk at any given time. If you risk only 2% of your trading account in one trade, do not think that you can open 10 positions at once — this is a sure way to get a margin call. Even if you only open two positions, but you are trading correlated currencies, you are still risking 2% in one trade. An example of this could be a risk of 1% on a long EURUSD position and a simultaneous risk of 1% on a long GBPUSD position. If there is a sharp jump in the market due to the US dollar, you will receive a loss on two positions and lose 2%. Therefore, try not to open multiple positions on correlating currency pairs, or at least be aware of the possible risks. Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
21
How To Create Your Own Trading StrategySooner or later every trader comes to the understanding that he needs his own trading system. It is possible to use others’ forex strategies, but they should also be adjusted and suit to you: to your own trading style. In this lesson we will talk about the necessary components of a trading strategy (TS), why a trader needs it, and what questions should be asked when developing a system. What is a trading strategy? A trading strategy is a set of rules allowing to systematize trading, to give a trader a clear notion of when it is better to enter the trade, when it is better to exit it and when it is better to abstain from trading. Also, the system specifies the time and time frame for trading, currency pairs to use and the lot to trade. TS helps to switch off emotions and protect against their negative impact on trading. Why create your own TS? There are many ready-made trading systems on the market, both simple and quite complex and understandable only to professionals. Beginners, as a rule, start trading using ready-made TS, and not the most complex one. However, with time almost each of them understands that trading is really effective only with a strategy, developed personally, based on one's own experience and preferences. Not always the TS is developed from scratch. Often (especially if it is the trader's first experience in creation of a strategy) a ready-made system is taken and some changes are made to it: some indicators are added, parameters of already installed instruments are changed, etc. Regardless of whether the trader creates a strategy from scratch or modifies a ready-made one, it must be suitable for his/her character: scalping is unlikely to suit a thoughtful and rational person, while long-term trading is not suitable for other people due to their nature. Essential components of a trading strategy Each strategy must include certain points, which together will ensure the stability of trading: • Logical reasoning. This is the basic idea on which the trading strategy is built. It is the foundation on which all other components are based; • Currency pairs; • Timeframe and time of trade. • Rules of entry • Rules of exit. How stop-loss and take-profit are set; • Trading lot volume and risk limitation. • If all of these parameters are taken into consideration, you can start testing the strategy on a history or demo account. Timeframe The timeframe choice depends on the time the trader is ready to devote to trading. While on the daily charts, the formation of a candle takes a whole day, and therefore only a few minutes a day will be required to assess the situation and make a decision, on M1, everything changes every minute, and the trader will need to be constantly present in the trading terminal. The smaller is the timeframe, the more signals will be received and the bigger is the potential profit. However, not everyone has the opportunity to devote all the day to trading, and for working people the daily chart will be the best option. It is also believed that technical analysis works better on the daily charts than on the hourly and especially on the minute charts, so D1 will be the best choice for beginners. Most traders use D1-M15 charts, the five-minute and 1-minute charts are too unpredictable and only highly specialized professionals are able to make stable profits on them. Currency pairs In most cases it is optimal to choose EURUSD or another currency pair as a trading asset. In the trading terminal MetaTrader 4, you can select to display only the desired assets by right-clicking on the "Market Watch" field and selecting "Symbol Set"-"Forex". If the idea is focused on a particular asset (for example, gold or the S&P 500 Index), the choice is even more obvious. Choice of tools for analysis Once the trading idea is clear, and timeframe and currency pairs for trading are selected, it is necessary to determine the tools for analysis and determination of entry/exit points. The main rule here is not to go overboard. As a rule, simple systems prove to be the most efficient in real trading. In the same TS, which are overloaded with indicators, various constructions and other signals, these tools often contradict each other, only confusing the trader and provoking him to make mistakes. If the strategy is an indicator one, as a rule, it must contain from 2 to 5 instruments. The minimum required is one trend indicator which determines the trade opening direction and one overbought/oversold indicator (oscillator) which helps to avoid false entries. If the strategy is focused on candlestick analysis, then the trader needs to be well-versed in Price Action patterns. If it is planned to use graphical analysis - a good knowledge of shapes (triangles, flags and pennants, double tops, etc.) is required. It is also necessary to decide whether news and important economic events will be taken into account (if the TS itself is built on the analysis). If the system is based on fundamental analysis, you need to decide what kind of news to trade. News can be tracked with the economic calendar and special indicators. Rules of entry and exit First of all, you need to decide on what type of orders you will enter the market: pending or market orders. Pending orders, on the one hand, help to avoid false entries, but, on the other hand, take away a part of the profit due to the fact that the price passes a certain distance before the moment when the order is activated. It is also necessary to decide in advance on what principle take profit and stop loss will be set. In some TC exposition of take profit is not necessary (for example, when using the trailing stop), but stop loss must always be exposed. Stop Loss is primarily a risk limiter, and protects the trader's capital from force majeure, such as from Internet or power outage. Once all of the rules are defined, they must be necessarily recorded on paper or in a separate file - that is, a checklist is needed. Then you can begin testing the TC. Testing on the history and on a demo account First of all, the strategy should be tested on the history. It will give statistics and primary understanding of its profitability. However historical data loses its relevance over time, so the strategy behavior on the real market will give more useful information. Before entering the real account, the TS should be tested on a demo account. The time of testing depends on the time frame: when trading on H1-H4 or, moreover, D1, it will take at least several months to determine the profitability, while the scalping strategy effectiveness can be determined in a week. Conclusion Every trader should have a trading system. Sometimes beginners think they can trade based solely on their intuition, especially if this delusion is confirmed by a couple of successful trades. Moreover, there are cases when experienced traders have opened deals based on intuition or against the rules of the system and earned huge money. However, the key factor in this exception is experience. A professional trader is able to understand when intuition can be activated and when it is necessary to work strictly according to the system. As a rule, intuition is used very seldom, and rather not to enter the market by a signal than to open a trade against the rules and get a loss. In any case, only professionals with years or even dozens of years of experience can afford such actions without serious risk for capital. There is only one correct way for beginners who are determined to learn how to earn on Forex - the way of systematic trading. Besides, there is one point that is very often missed in their trading, even by experienced traders. This is the Logical Rationale for the trading strategy.
Education
by DeGRAM
6