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How To Become A Successful Forex Trader

How To Become A Successful Forex Trader 

How To Become A Successful Forex Trader

Forex traders just starting call at the forex market are often unprepared for what lies ahead and, as such, find yourself undergoing an equivalent life cycle: first they dive in headfirst – usually losing their first account – then they either hand over , or they take a step back and do a touch more research and open a demo account to practice. those that do that will often eventually open another live account, and knowledge a touch more success – breaking even or turning a profit. to assist avoid the losses from hastily diving into forex trading, this text will introduce you to a framework for a medium-term forex trading system to urge you started on the proper foot, assist you economize and ultimately become a profitable retail forex trader.
 
 
Why Medium Term? 
 
How To Become A Successful Forex Trader
 
So, why are we that specialize in medium-term forex trading? Why not long-term or short-term strategies? To answer that question, let’s take a glance at the subsequent comparison table:
Now, you'll notice that both short-term and long-term forex traders require an outsized amount of capital – the primary type needs it to get enough leverage, and therefore the other to hide volatility. Although these two sorts of forex traders exist within the marketplace, they're often positions held by high-net-worth individuals or larger funds. For these reasons, Forex traders are presumably to succeed employing a medium-term strategy.
 
 
The Basic Framework of a Forex Trader
 
The framework of the strategy covered during this article will specialise in one central concept: trading with the chances . to try to to this, we'll check out a spread of techniques in multiple time frames to work out whether a given trade is worth taking. confine mind, however, that this is often not a mechanical/automatic trading system; rather, it's a system by which you'll receive technical input and make a choice based upon it. The key's finding situations where all (or most) of the technical signals point within the same direction. These high-probability trading situations will, in turn, generally be profitable.

  Chart Creation and Markup Selecting a Trading Program
 
We will be employing a free program called MetaTrader for instance this trading strategy; however, many other similar programs also can be used which will yield an equivalent results. (For more recommendations on the way to find one, see Forex Automation Software For Hands-Free Trading.) There are two basic items the trading program must have:

the ability to display three different time frames simultaneously
the ability to plot technical indicators, like moving averages (EMA and SMA), relative strength index (RSI), stochastics and moving average convergence divergence (MACD)
 
Setting up the Indicators
 
Now we'll check out the way to found out this strategy in your chosen trading program. we'll also define a set of technical indicators with rules related to them. These technical indicators are used as a filter for your trades.

If a forex trader prefer to use more indicators than shown here, you'll create a more reliable system which will generate fewer trading opportunities. Conversely, if you select to use fewer indicators than shown here, you'll create a less-reliable system which will generate more trading opportunities. Here are the settings that we'll use for this article:
 
How To Become A Successful Forex Trader

 
 

Minute-by-minute candlestick chart
  • RSI (15)
  • stochastics (15,3,3)
  • MACD (Default)
Hourly candlestick chart

  • EMA (100)
  • EMA (10)
  • EMA (5)
  • MACD (Default)
Daily candlestick chart
  • SMA (100)
Adding in Other Studies
Now you'll want to include the utilization of a number of the more subjective studies, like the following:

Significant trend lines that you simply see in any of the time frames
Fibonacci retracements, arcs or fans that you simply see within the hourly or daily charts
Support or resistance that you simply see in any of the time frames
Pivot points calculated from the previous day to the hourly and minutely charts
chart patterns that you simply see in any of the time frames


Conclusion
Anyone can make money within the forex market, but this needs patience and following a well-defined strategy. However, if you approach forex trading via a careful, medium-term strategy, you'll avoid becoming a casualty of this market. Get to understand 4 Ways of Trading Which Make Profits

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