Identify a market opportunity: Using technical analysis to find entry levels Trends are made of longer direction impulses and retracements, in a zig-zag shape, which translates on entry opportunities within the trend.
No trend ever goes up or down in a vertical line. If the quote is in a downtrend, then the price will be making lower lows, followed by lower highs, also retracements. The assumption behind a trending forex pair is that on an uptrend the price is making higher highs, followed by higher lows, called retracements. If the currency pair you choose to trade has the right balance of fundamental factors, open a daily chart (on your trading platform), and let’s try to identify the trend. Now it’s time to find a trend within the price action. If the outlook is positive then you should consider long positions. So, if the country’s economic outlook is rumoured to be negative, you should think about positioning yourself short. The purpose for this fundamental analysis is to try to predict if the current, or future, economic outlook of a country's is good, and if so, their currency should strengthen versus the quote currency, or vice-versa.Īs the financial say goes “sell the rumour, buy the news”. Is the country represented by that currency in a stable economic or political position? Check the economic, political and social factors that can affect the demand and supply of a currency. To start finding a trending pair you should first “listen” to the fundamentals. And by doing so, you will have more chances to be trading the trend where smart money, like banks and funds, are also trading.
Some traders prefer to trade on monthly charts, some the weekly, but on this guide, we recommend, at least, using the daily time-frame. Anything below the D1 time-frame, not only will be a risk to trade, but you would not be able to see if there’s a trend or not. Not on M5 time-frame! To find a trending forex pair, you should always look at higher TFs. When we say a trending pair, we mean a forex pair trending on higher time-frames. No-one wants to open a position on a pair that is ranging and be stuck with an open trade that isn’t going anywhere, possibly accumulating swap fees, and slowly eating your account margin.
How to start forex trading step by step how to#
The first step on how to trade forex successfully is to find a trending currency pair. How to partially close a position with MT4 and MT5.Ĭhoose the right forex pair: Finding a trending currency pair.Monitor your trade: Partially closing your position in profit.What to consider for an efficient money management plan?.Open your trade: Using money management to protect your account.Decide to enter the market: Defining a precise trading plan.How to find an entry-level in a trending forex pair?.Identify a market opportunity: Using technical analysis to find entry levels.How to identify a trend in a forex pair?.Choose the right forex pair: Finding a trending currency pair.
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