The Forex market has long produced a vast range of trading approaches.
Finding a strategy that works for you is one of the most important aspects of gaining success in the Forex market.
It’s also worth noting that successful traders don’t employ any sort of magic in their trading. For both a rookie and a successful trader, everything has been invented for a long time.
The most important step for novices is to pick a simple approach and adhere to its ideas and laws.
So, what does a novice trader need to know in order to make money?
For a newbie, determining price levels and trading them successfully is challenging.
Because the price does not create definite points, but rather forms zones, there are no precise restrictions in this area.
Many traders employ support and resistance levels in their trading, and for novices, the notion of selling from resistance and purchasing from support will be the most difficult chore at first.
Based on price levels, there are three types of trading methods.
- If the market is moving in a sideways pattern, the trader can sell from resistance and buy from support.
- If you see that the market seems to be trending in one direction, such as negative, a trader might sell from resistance and wait for support to break through.
- The same laws apply in a bull market, but in the other direction. This zone becomes a support from which you may purchase if the price breaks through the resistance.
Consider trading concepts based on price levels.
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Rule #1: Recognize the market’s context
The ability to accurately grasp the market situation is the key to effective trading from the levels.
Selling methods will not work in this environment because bearish pressure drives the market movement through an impulsive movement that breaks through support and establishes new lows.
That is why it is critical to adhere to the market context concept:
An impulsive bearish context occurs when the market collapses, establishing new highs and lows.
The correction is caused by a weaker impulse than the main trend.
When demand and supply are almost equal and the price cannot go in one direction, it is said to be in a sideways movement.
The price will make an impulse in the direction of the strong side as soon as the bulls or bears gain control.
Rule #2: Analysis from the Top-Down
Big money rules the market, and enormous timescales are extremely important.
It’s also critical for a regular trader to understand where the smart money is driving the market.
To do so, look for strong levels on the monthly, weekly, and daily timeframes to determine where the price is most likely to bounce.
If the price is above the critical levels, on the other hand, the market is bullish.
Rule #3: Patterns of Candlesticks
Candlestick patterns, which are a powerful analytical tool, are used by almost every trader.
Reversal candlestick patterns are a great way to get into a trend reversal.
The pattern’s signal will be greater the higher the period on which it was generated.
Candlestick formations are an essential aspect of a trader’s professional development.
Rule #4: Managing Risk
Any trader should be aware of and prepared to manage the risks.
Despite the fact that this issue extends beyond the definition of the market context, it is nonetheless vital.
Risks can be managed in a variety of ways.
Setting a stop loss and risk in each trade, as suggested, of no more than 2% percent is an important criterion.
Hedge fund managers take on a much smaller amount of each transaction, possibly as little as 1%.
It is preferable to grow slowly rather than collapse rapidly.
If you lose 2% of your capital, you’ll need to make 4% in the following transaction to recover your money back, which isn’t tough in most cases.
However, if you lose 50%, you’ll need to produce a 100% profit right away, which is very impossible.
Take a look at the news.
News has a significant influence on all markets.
Every piece of news has the potential to swing the market against you and derail any trading strategy.
Read the news, professional analytics, reports, and any other relevant information.
In order to appropriately estimate future moves, you need always be up to speed on the newest news.
Rule #5: Create a trading strategy
Every trader should have a well-thought-out strategy and a well-defined action plan.
Before each trading session, the trader examines the market and sketches out the market’s potential direction as well as potential starting positions.
You should be prepared and know what you’re going to do even before the market starts.
After each trading day, you must review your positions and correct any errors.
Rule #6: Use Discipline – Stick To Your Rules
Don’t be swayed by your feelings.
It’s not a good idea to start a new job on a regular basis.
Don’t make a decision every five minutes.
Don’t overlook the dangers!
You will not drown in this emotional tempest if you have a sound strategy in place.
Rule #7: Accept And Move Forwards From Your Losses
Every day, the market offers millions of profit prospects.
However, if you lose all of your money in the hopes of recouping your losses, you will be unable to trade for a long time and will not be able to become a good trader.
Trading is a long journey that requires the ability to stay on course, take losses, and move on.
To summarize the above, you can do the following steps:
- Determine the critical levels of support and opposition.
- Wait for the candle to develop in the direction you want it to.
- Stop loss orders should be placed above or below the candlestick pattern.
- The following support or resistance levels are used as take profit points.
- Always employ good money management when trading, and never take on a risk that is greater than the reward.