Forex traders starting from the forex market often are not prepared for what lies ahead and end up experiencing the same cycle of life: they first dive in their heads-they usually lose their first account-then give up or take a step back and conduct a bit more research and open a demo account for practice. Those who do this often end up opening another live account and have more success–even breaking or profiting. This article will introduce you to a medium-term Forex Trading system to avoid losses by quickly diving into Forex trading so that you get on the right foot, save money and eventually become a successful retail forex trader.
So why do we concentrate on medium-term foreign trade? Why not short-term approaches or long-term strategies? Let us look at the following table of comparison to answer this question:
You will now find that both short and long-term forex traders require large amounts of investment, with the first kind of capital required to generate enough liquidity, and the second one. Although both types of forex traders are available on the market, they are often owned by individuals with a high net worth or large funds. Forex traders are very likely to succeed with a medium-term strategy for these reasons.
Forex Trader Basic Framework
This article focuses on one central concept within the strategy framework: trade with odds. To do so, over multiple periods, we must analyze a variety of techniques in deciding if a specific company should be taken. Nonetheless, keep in mind that this is not a mechanical/automatic trading system; rather, it is a system that gives you technical information and makes a decision. It is important to find circumstances in which all (or most) technical signals point in the same direction. In addition, these highly likely trade conditions would usually be favorable.
Chart Creation and Markup
Selecting a Trading Program
In order to illustrate this business strategy, we’ll use a free program called MetaTrader but a lot of other software like that can also achieve the same results. (There are two fundamental elements the trading system needs to have: (For more information on how to find one, see Forex automation software for hands-free trading)
The ability to demonstrate the ability to chart technical indicators such as moving averages (EMA and SMA), relative force index (RSI), stochastic and average moving convergence divergences (MACD) at once in three different timescales
Setting up the Indicators
We will now examine how this strategy can be implemented in your selected trading program. A set of technical indicators with rules related to them will also be defined. These technical indicators are used for your business as a filter.
If a forex trader uses more metrics than shown, a more accurate framework will be built that creates fewer opportunities for trading. Instead, you will develop a less reliable system that will generate more trading opportunities if you choose to use fewer indicators than shown here. The settings for this article are as follows:
Candlestick Chart Minute By Minute
- RSI (15)
- stochastics (15,3,3)
- MACD (Default)
Hourly candlestick chart
- EMA (100)
- EMA (10)
- EMA (5)
- MACD (Default)
Daily candlestick chart
- SMA (100)
Now you would like to take into account the use of some of the more qualitative reports, such as:
Major trend lines in the hourly or daily chart Fibonacci retracements, bows or fans You see in one of the time chart Supports or resistance Pivot points from the previous day to the hourly or minute chart patterns You see in any one of the time frames Time frames Pivotal points
Entry and Exit Points To Be Found
The key to searching for entry points is to seek times in the same direction by all indicators. In addition, the signaling should support the timing and direction of trade in each time frame. You should look for some specific instances:
- Candlestick enclosure bullish or other types
- Breakouts upward trendline/channel
- RSI, stochastics, and MACD are positive variations
- Average crossings moving (more short and longer crossings)
- Strong, strong and weak, remote resistance
- Bearish Engulfing candlestick or other formation
- Break-down Trendline / Channel
- Negative RSI, stochastic and MACD discrepancies
- Average crossings (crossing shorter than longer)
- Strong, strong and weak, far-flung support
It is a good idea to set exit points before even trade is even put (both stop losses and profit). These points should only be placed at key levels and modified when your trade premise is changed (often due to fundamental issues). Such exit points can be put at key stages,
- Just before areas of strong support or resistance
- At main points of Fibonacci (traces, fans or arcs)
- Just within the major trend lines or networks
Let’s look at a few examples of various graphs with a variety of criteria for evaluating common entry and exit points. Finally, ensure that any company that you intend to put in all 3-time frames is sponsored.
Figure 2 above indicates that many indicators point in the same direction. There are a bare head and shell pattern, a MACD, a Fibonacci resistance, and a bearish (five and ten days) EMA crossover. We see also that help for Fibonacci offers a good escape. The business is good for 50 tubes and is carried out for less than two days.
In Figure 3 above, several signs pointing to a long location can be seen here. We have a bullish cough, support from Fibonacci and 100-day support from SMA. Again, we see an excellent exit point with a Fibonacci resistor level. Within just a few weeks, this deal is perfect for approximately 200 pipes. Please note that this trade can be split into smaller hourly trades.
Money and Risk Management
Currency management is essential for market success, but particularly for the forex market, one of the most volatile trading markets. Many fundamental factors can only give currency rates in just minutes that move in one direction. It is critical that your downside is reduced only when good opportunities occur by using stop-loss points and trading.
Some specific methods for limiting risk are as follows:
n Increasing the number of indicators. This leads to a tougher filter that monitors your trades. Remember that this will lead to fewer chances.
Set stop-loss points at the nearest level of resistance. It should be remembered that this can contribute to lost revenue.
Use trailing-stop losses to reduce profits and losses when your business is good. Nevertheless, it should be remembered that this may also contribute to lost revenue.
Everyone in the forex market can make money, but patience and a clearly defined strategy are needed here. However, you can avoid becoming a victim of this market if you approach Forex trading through a careful, medium-term strategy.
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