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5-Step Guide to Winning Forex Trading
Here are the secrets to winning forex trading that https://kamalinews.id/ will enable you to master the complexities of the forex market. The forex market is the largest market in the world in terms of the dollar value of average daily trading, dwarfing the stock and bond markets. It offers traders a number of inherent advantages, including the highest leverage available in any investment arena and the fact that there is market action every trading day. Rarely, if ever, is there a trading day in the forex markets when “nothing happens.”
Forex trading is often hailed as the last great investing frontier – the one market where a small investor with just a little bit of trading capital can realistically hope to trade their way to a fortune. However, it is also the most widely-traded market by large institutional investors, with billions of dollars in currency exchanges happening all around the world every day that there’s a bank open somewhere.
Winning Forex Trading Step #1 – Pay Attention to Daily Pivot Points
Paying attention to daily pivot points is especially important if you’re a day trader, but it’s also important even if you’re more of a position trader, swing trader, or only trade long-term time frames. Why? Because of the simple fact that thousands of other traders watch pivot levels.
Pivot trading is sometimes almost like a self-fulfilling prophecy. What we mean by that is that markets will often find support or resistance, or make market turns, at pivot levels simply because a lot of traders will place orders at those levels because they’re confirmed pivot traders. Therefore, often times when significant trading moves occur off pivot levels, there is really no fundamental reason for the move other than a lot of traders have placed trades expecting such a move.
Winning Forex Trading Step #2 – Trade with an Edge
The most successful traders are those who only risk their money when an opportunity in the market presents them with an edge, something that increases the probability of the trade they initiate being successful.
Your edge can be any of a number of things, even something as simple as buying at a price level that has previously shown itself as a level that provides significant support for the market (or selling at a price level that you’ve identified as strong resistance).
Winning Forex Trading Step #3 – Preserve Your Capital
In forex trading, avoiding large losses is more important than making large profits. That may not sound quite right to you if you’re a novice in the market, but it is nonetheless true. Winning forex trading involves knowing how to preserve your capital.
No less a trading wizard than the great Paul Tudor Jones, creator of the hugely successful hedge fund, the Tudor Corporation, has flatly stated that “The most important rule of trading is to play great defense.” (By the way, Tudor Jones is an excellent trader to study and learn from. Not only does he have a nearly unparalleled record of profitable trading, but he is also a major philanthropist and was instrumental in creating the ethics training program that was eventually adopted as a requirement for membership on all U.S. futures exchanges.)
Winning Forex Trading Step #4 – Simplify your Technical Analysis
Here are pictures of two very different forex traders for you to consider:
Trader #1 has a large, swanky office, a top-of-the-line, specially-made trading computer, multiple monitors and market news feeds, and plenty of charts, all of which are loaded with at least eight or nine technical indicators – five or six moving averages, two or three momentum indicators, Fibonacci lines, etc.
Trader #2 works in a relatively spare and simple office space, uses just a regular laptop or notebook computer, and an examination of his charts reveals just one or two – perhaps three at most – technical indicators overlaid on the market’s price action.
Winning Forex Trading Step #5 – Place Stop-loss Orders at Reasonable Price Levels
This axiom may seem like just an element of preserving your trading capital in the event of a losing trade. It is indeed that, but it is also an essential element in winning forex trading.
Many novice traders make the mistake of believing that risk management means nothing more than putting stop-loss orders very close to their trade entry point. It’s true that part of good money management means that you shouldn’t put on trades with stop-loss levels so far away from your entry point that they give the trade an unfavorable risk/reward ratio (i.e., risking more in the event the trade loses than you reasonably stand to make if the trade proves to be a winner). However, one factor that frequently contributes to lack of trading success is habitually running stop orders too close to your entry point, as evidenced by having the trade stopped out for a loss, only to then see the market turn back in favor of the trade and having to endure watching price advance to a level that would have returned you a sizeable profit…if only you hadn’t been stopped out for a loss.