In order to be a successful Forex Trading , you must first learn how to start Trading Forex as a beginner, as well as the basic of Forex Trading. You also need to understand what is Forex trading & why it is so profitable of all the stock & future markets around the world.
You also need to understand you strengths in trading & which tools works best in different trading environments
Forex Trading For Beginners
Forex trading is very interesting and moving activity & it can be toughest but easiest way to make money If you know when to trade and which trading environment one should avoid. As a newbie, one should never underestimate the importance of financial education. Newbies do often have very unrealistic expectations for Forex trading market and that is the only reason why they struggle to control their emotions, that is why they struggle to understand and fail to perform consistently .
What is Forex Market
Forex exchange market, also know as FX market, is an over the counter market where world’s money and currencies are exchange. Hedge funds, banks, institutional investors, multinationals are the main Liquidity provider in the Forex Market.
Forex traders usually choose different trading styles to trade in forex market. It depends on type of market environment, their trading account, risk management and style they are comfortable with.
Various Trading styles that traders adopt
* Day Trading
* Swing Trading
Lets’ discuss in brief the type of trading style
Day trading and scalping are two of the most used and aggressive trading styles. In day trading traders can opt to stay in a trade for a session or two or even few more hours till the day close, if the momentum is carried on from one session to other. On the other side, scalping can be used for few seconds to minutes. Scalping is also the best method if you are looking to scalp for few when there is high impact news is about to hit the market. As day trading and scalping are very short term trading styles, Swing Trading is longer term, where positions can be held for few days to few weeks.
While you use any of the trading style, You use two type of orders i.e Market order & Limit orders . As the word say ‘market order’, these orders are executed immediately as the execution is instantly and take profit and stop loss are used as enter and exit strategy.
Limit orders are used as day trading or swing trading, brokers allow traders to enter the market at pre-determined (“buy limit ” or “sell limit”) and these orders are used to traders breakout on upside or downside or even can be used to match your trading style and time frame you use.
As Forex trading is often offered with leverage, potential profits are magnified, along with potential losses. For this reason, it’s important to use stop-loss orders to limit your losses if the market goes against you. One of the best ways to mitigate your risk is to trade with the trend.
How to define trend in Forex
Next important part of trading currencies and Commodities in Forex Market is to define the trend. Trend is usually defined when price prints high and lows. Highs and lows followed by rejection of support and resistance and printing new high & low defines the trend. Usually we have primary trend which is defined on higher time frames like weekly & Monthly & usually trend trading with lower risk can be defined on smaller time frame.
Trend trading from weekly or monthly to h4 & smaller time frame
Chart speaks louder than words. Usually we see rallies followed by attempts to reach the broken levels. It produce high probability trades on smaller time frames like Daily & h4 ..
Forex Trend Trading, fibos & retracement Levels
It is very important for forex beginners to look for setups that offers high reward and are high probability setup. Usually, you need to tick mark few areas before taking a setup.
Take a look at the above Gbp/jpy Chart
We have double bottom & then price have rotation just above the double bottom.
Made new highs consistently
Now price is correcting between 50.0 & 61.8% Fibonacci level.
I would recommend a buy at the level with stops just below the last rotation area which is 130.10
I have pointed out double bottom, strong trend followed by rejection levels and fibonacci with confluence & that is the exact way to approach chart pattern. Although as a supply demand trader we look for zones but in order to make money consistently in forex market you should be able to develop new techniques to take entries that are offering high reward. Usually we have strong DBR (drop base rally on weekly chart which is not mentioned in the chart )
I’ll update the chart in couple of days to see how this trade play out
Trend Trading Dilemma for Forex beginner Traders
Its really a trading dilemma for every trader on how to start or approach forex Trading and where to start, which strategy to pick & how much money you need to kick start your trading career. For me, you always need to as simple as you can. Pick a strategy and keep working on it for atleast six months to a year. You’ll get all the answer on where to exit & when and when to enter. You trading report will give you all the answers but it does requires lot of patience & hard work . I always recommend swing trading or day trading which keeps you in the trade for 1 to two days is the best way to approach.
Scalping requires lot of mind work and experience as there is lot of noise on shorter time frames and very difficult to define trend in scalping and even for few pips, you requires too much of accuracy to make profit in scalping.
There is no point in putting lot of indicators on the chart and look to predict price based on figures based on indicators. One thing you must keep in mind, Indicator follow price. Price is fractal and repeat over a period of time. Try and predict price with Candlestick charts , support resistance strategy conincide with Support resistance, mark zones & also trend defining is very important.
I usually pick weekly and monthly time frame to define trend with RSI, If RSI is above 50 on monthly or even weekly, then I would pick pairs that are trending nicely on h4 and daily and are in good momentum. Then, I always look for confluence, fibos & zones to take my profit & set my stops. Keep things simple and profit follow. I would keep updating the blog with the examples based on description.