FOREX TRADING TIPS 1
1.0 Analysis of the last 12 hours
First impressions as we sit on the screen are usually the right ones if we are in a positive state of play and with sufficient strength to attack the market.
To start trading on Forex if we can put the economic news either the chain CNBC, Bloomberg or similar to situate us in reality and see what kind of events are going to happen in the day so as not to be surprised by avalanches of shorts or lengths due to extraordinary events.
Nowadays you have to be prepared for almost anything and therefore the channels of live information will be of great help to see the market pulse what is talking and trying in the whole world. Being informed about the facts and facts globally makes us have a fairly broad view of many of the factors that can affect us the time to put an operation to the market.
Due to the large amount of information in the market we will have to filter and be objectives and not be stubborn when it comes to changing your mind about the direction of market.
We cannot affirm the trend if in one hour or four charts it is on the side or without clear direction. It is not entirely wrong to entangle Heiken Ashi graphics in the that we can filter the volatility and see the market trend in a clearer and without noises that make us doubt. There are a large number of indicators and platforms that support this type of graphics and being uncommon can give us tracks that otherwise with other types of graphics we would not see.
1.1 Analysis of the arguments to enter the market
Each operator at your level should have in front of your screen the conditions necessary to enter the market, these are the necessary conditions without which would never enter the market. We will analyse the most objective without having account for many others that can be equally valid for many operators.
The arguments are going to be very simple given that in simplicity lies the success in this type of activity. You start with the most basic and continue with what you It needs more analysis.
1.2 Are we in trend?
It’s a very basic question if we look at the daily or four-hour charts, but if we operate in 15 minutes and the subject changes because many times the price found on the side or has neither strength nor direction. There are a large number of days in which we should not operate and yet we do it. Now only entering those days when it is not clear we are adding risk to our trading and being less professionals because we are adding error probabilities in it.
We are not saying that we look for the perfect conditions in trends about currency because it is quite complicated to predict changes in trend and time in which the movement will be made, but if we can limit the risk by seeing the points more secure and with less stop. We will have to analyse the trend in short to plan an almost safe or with very limited risk.
The tendency is usually marked in the first hours of the morning or even at first Evening time with the European opening. Therefore, it is not convenient in Normal conditions look for trend in the middle of the afternoon or at noon. Try to fit the analysis of larger graphics with smaller graphics without that we have dissonant opinions about the direction of the market.
At the time of estimating an address we should think, I want to take 30 pips, it is the graphic trend that I’m looking broad enough to catch that travel? If not, it is not advisable to enter. You must take into account the ranges of the crossroads that we operate and the daily volatility. You have to add arguments on paper to put an operation on the market.
At first, we can get more or less crazy to look for arguments and perform a clean activity, but with a little training you will not need almost or write the arguments on a piece of paper, that’s when it’s done in a way mental after thousands of operations following the same entry pattern.
1.3 Is it a good time to enter the market?
Regarding the timetables of the currencies we must take into account which session is being negotiating because as there is no closing or opening during the week each Forex has its schedule in addition to those who live without almost a fixed schedule. The most normal thing being Europeans is that our trading session starts at 8 o’clock in the tomorrow having already closed the Asian market.
As you can see in the graphs every day the volatility between 6 and 8 in the morning decreases and returns with rage from 8 in the morning. Keep in mind that the Asian session is of shorter duration and for that reason there will be hours in which the market seems to be dead. If we put ourselves into viable trading hours we should think that not always dawns on the same side so there will be days when you have to enter market in idle hours, but it is not usual.
The trend must be observed before and after the European opening, it is not advisable to open an operation before nine, but if half an hour before waiting to take us a pre-opening movement. At 9 in the morning is when the dance starts and that’s where we should have a well-trained eye to be able
guess if our opinions are what the graph is showing us. It is quite interesting to measure the highs and lows of the Asian session due to that they have to mark their limits for the next 12 hours without knowing what will go on the balloon in that period. It is also interesting to know if we have any support and resistance marked by daily or weekly pivots. Even going more there, if we have some long-term average close as those of 200 or 800 periods. Once we have clear the forecast of the day we will have passed over the first barrier of analysis in our operations.
1.4. Is our position correct?
Depending on the conviction we have about the market we will operate with all our firepower or we will divide our operating capacity between units that we consider necessary. The most logical thing to safeguard our portfolio will start with a third of the daily position and with a third of our maximum daily loss. It is quite logical that we do not want to stay out of the market in the first have exhausted our ration of stop points so the most logical thing to do is to go building a potion in parts throughout the day or in the morning. I don’t know Recommend never build a trading position while you are in losses.
This It is a very common activity in medium term investment, but not for trading leveraged since we can see our risk management disabled if we enter in a maelstrom of cognitive dissonance that makes us lose the papers. Therefore, we must think very well if we start with an operation in the whole day or divide them or even keep an ace up your sleeve just in case throughout the day changing the conditions and the direction. Always keep in mind the basic norm of trading, set a loss target maximum and never pass over him, this will make us survive something more time in the market.
1.5. Our stop is well located?
Another of the errors that are committed more frequently is the placement of the stop in Places where it is not right and are perfectly grass of the lions. Must have in mind that depending on the size of the portfolio and our risk profile, stops will vary from very small distances when we are very leveraged to very long distances when we go with little position.
The stops are pursued, but not to do wrong to the Traders but for a simple reason, because the price needs oxygen to keep going up or down and that oxygen they are the fresh orders of those who are against the trend. In each asset we will have higher and lower stops and we will give an example of higher to lower stop. At the EURUSD cross, we could be worth 30 points at the crossroads GBPUSD could be worth 20 points and at USDCAD we could be worth about 10 pips of stop. This would be a theoretical entry in which our point of attack it was almost perfect and that we did not have maximums, entering long and minimum entering short, next.
One of the greatest successes is to find a good entry point, this is because our position will be very short time in losses and very fast in territory positive. Only patience and tenacity will make us tickets every day more optimal and without major shocks that some small recoil. Therefore, once you decide the number of points to risk, we will only have to look for the least damaging point for our portfolio in terms of stop and odds of success.
1.6. Are we doing overtrading?
One of the greatest dangers is increasing the number of operations and the size of the operation as we are immersed in losses. It must be taken into account that each once you lose, you have less capital to recover it, so the recovery of the initial capital must be slowed down to continue adjusting the risk management to our existing capital. Do not think people that overtrading is only for losses because I have also known to people who still winning operated more and more losing sight of the rules that one must fulfil.
Returning to classic overtrading, the one that makes us operate more as we lose more, we have to say that it is one of the greatest dangers that we have before us to fulfil the myth of three ruins before starting to be profitable. It is not entirely illogical to want recover positions in a more or less secure way, but you are not taking tells the psychological pressure on yourself when you are already seeing that you have skipped the number of points lost for a session and that has probably been open the way to a big loss in your portfolio.
It is very easy to say today I leave it, but it is very difficult to leave it and leave the trading table and Take a break for a few days. If we enter losing dynamics, the most logical thing is Stop and think about what is going wrong and if you have a quick solution. Is very advisable to ask for advice, talk with more traders, analyse the operations, return to the Risk management and let the market flow a few days. If we perform these relaxation therapies, we will return to the market stronger and more confident and not thinking about recovering the lost but winning consistently. Is more to leave the previous loop than to continue delving into it.
Do not miss our Learning Forex: Lesson 13