Become a Profitable Forex Trader in 5 Easy Steps
In this book you will learn: If I spot a trend happening around the high or the low I move in. Thank you very much Nial, I read almost all your article and it really help me in my trading.
8) Trading Psychology
Position trading is the opposite of day trading because the goal is to profit from the move in the primary trend rather than the daily short-term fluctuations.
Position traders may use a combination of technical and fundamental analysis to make trading decisions, and often perform more thorough evaluations of the companies behind the stocks. Unlike day traders, they have the luxury of time. The basic tenet of stock market analysis is that stocks move in trends. Once a trend starts, it is likely to continue.
Traders make profits by recognizing a trend early, buying a stock for the duration of the trend, and selling as soon as it has run its course. Position traders will look at longer-term analyses such as the day moving average to identify the primary trend.
Swing traders might look at the day average and day traders look at the day average or even hourly moving averages. Whereas day traders can set aside fundamentals , position traders typically start their selection process using fundamental analysis. They then turn to technical analysis to identify proper buy points, potential targets, and stop-loss levels.
All investors and traders should match their trading style with their own personal goals, and each style has its pros and cons.
The first consideration must be the reason you are investing in the first place. Japanese candlestick trading has been around for decades. A candle gives a lot of information to the trader. This EA focuses on the candle high and the candle low as those reading often represent short term support and resistance. These levels represent decision points when trading this EA. At these points you need to tell the EA to trade breakouts or bounces. Once the new candle starts forming the trading question is: By using the Candle trader EA you can trade either the breakouts or bounce or both as they occur over a 24 hour period.
So the big question is — When is the price likely to breakout of the current range and when is the price likely to bounce back into the current range. The price behaves differently depending on the time of day. In times of low volatility bounces are more likely to happen. In times of high volatility breakouts are more likely to happen.
If you can work this out, you can be a very successful Forex trader. Look at the trading charts over a period of 24 hours and identify the quite times low volatility and hectic times high volatility with larger candles. Look at recorded statistics. When optimising the EA you will find the best time when breakouts work and the best times when bounces work.
You should do this for all timeframes and all currencies to find the best combination of currencies, settings and timeframes. You can then sort them in order of historic performance. You can test you finding by trading them for a few weeks on a demo account and then switching to a live account once you are perfectly happy.
Firstly, this is a trading tool. It must be managed by it owner. It is not a mindless, plug and play, set and forget that requires no thought. Once you have done all the homework required to determine which currency, timeframe and setting will give you the best chance of success can you let it trade automatically.
It will then trade looking at the previous candle to find the decision points and activate the decisions as instructed. This EA comes with no settings. This is because ONE set of settings could not possibly work for all currencies, all timeframes, all broker account types, all account sizes, all time-zones, all spreads or commission charges, all margin requirements, all daylight savings adjustments, lot size broker policies, price feeds, candle cut off times, broker trading times, trader risk profiles etc.
Most EAs fail to perform when using these default settings for those reasons. That is best is to optimise the EA on the exact broker account you will be using to trade it using the brokers own historical data. Even this will have limitations. So the forum has been created for owners of the EA to share experiences on how they best trade and test the EA. There will be many tips and ideas posted.
The Forum is also the place to ask any questions about this EA and for those discussions. The best online Forex brokers quote the exchange rate of two currencies in a pair. This is because in any Forex trading transaction, one currency is being bought, while another is being sold. While the second currency, the US Dollar, is the counter or quote currency. If you decide to buy this particular currency pair, it clearly indicates how much of the quote currency USD is required to buy one unit of the base currency EUR.
In the above example, 1. If you sell the currency pair, you will receive 1. If you want an easy way to remember the principle think of the base currency as the basis for the trade. Whether you are buying or selling a currency pair the base currency is always the same.
In other words, it is always based on the first currency in the pair. The whole point behind Forex trading, is to buy a currency pair if you consider the base currency will increase in value appreciate , in relation to the quote currency.
If you think the base currency will decrease depreciate in value in relation to the quote currency, then you should choose to sell the pair. Some of you reading this will find this section a little boring. We appreciate that not everyone will want to know about the history. But we consider it an important part of your Forex journey. The foreign exchange market, or Forex, FX, or currency market, as it now often known, refers to a global decentralized market in which currencies are traded.
Under this heading are all aspects of buying, selling, and exchanging different currencies at a current or predetermined price. Currencies have been traded across the globe for centuries, but one of the most important events in the history of the Forex market happened in the s, when the gold standard was introduced.
Before its introduction it would generally have been gold and silver that were used for international payment. The value of these two metals was very much up and down.
And were affected by global supply and demand. If a new gold mine was discovered it would drive the price of gold down. The gold standard was introduced so that governments could guarantee the conversion of a currency into a specified amount of gold, and vice versa.
A currencythat would be backed by gold, and should have stabilized world currencies, sounds a pretty good idea in theory.