What You Need To Know About Forex Trading
Topics: forex, forex trading, forex opportunity, free forex buy and sell indicator, inversion en forex
No matter how you choose to learn and improve your forex trading skills, you need to understand 4 basic elements of Technical Analysis to be able to trade for profit with any forex trading system. No matter what your forex system is, when learning to trade forex, you must know these 4 basic key elements:
1st:
You have to understand how to pick the TREND of the market session that you are trading in.
2nd:
To help you trade with the trend of the session you need to understand price action and how to use OSCILLATORS, as they help to smooth out the trend.
3rd:
You will have to have a working knowledge of FIBONACCI’s.
4th:
The last element is being able to look in the past at previous SUPPORT & RESISTANCE price points in the market.
1. Trend
How do you pick the TREND of the Day or more important the TREND of the Market Session that you are trading in?
When you start your trading for the day, the first question you have to you ask yourself is: Which way am I trading today? In other words: Am I buying or selling? Is the market going to go up or down?
If you don’t know that answer within the first 2 minutes of looking at your charts, then you are guessing and that means you will probably trade wrong and you will probably loose.
You need to understand that there are 4 trading sessions in each 24 hour day (Sydney, Tokyo, London, and New York). Each session has its own characteristics in direct relationship with Daily Range, Areas of Support and Resistance also known as (Swing Highs and Swing Lows) and actual Price Action Movement.
In order to properly determine the trend you have to look at multiple time frames at least (3) i.e. 5min chart, 15min, 1hr chart. This will help you to see a longer term trend and a shorter term trend so that you can understand how to trade with and against, meaning you will learn how to trade Counter Trend Trade as well as With the Trend Trade. This is very important because the market does not move strait up or strait down.
You need a MENTOR that will teach you how to determine the TREND.
2. OSCILLATORS
To help you trade with the trend of the session you need to understand price action and how to use OSCILLATORS, as they help to smooth out the trend.
Oscillators are momentum indicators that help us to see when the market is moving from an overbought or oversold position. In other words they help us to see when the market has moved in one direction long enough to merit a retrace or pullback.
There are two types: Those that show Momentum and those that show Price Exhaustion.
Momentum Oscillators are typically some sort of Moving Average. There are: Simple, Exponential, Smoothed, and Linear Weighted to name a few. These are supposed to filter out the “noise of the market” and help you to determine a more smoothed out trend movement.
Price Exhaustion Oscillators are available by the dozens like: Stochastics, Relative Strength Index, Average True Range, Ichimoku Kinko Hyo, MACD and many, many others.
The problem with Oscillators is that they are all LAGGING, meaning that they follow price action as the market moves up and down the Oscillator will follow the price up and down. They do not predict, they cannot predict, they will never predict with accuracy the way price is going to move. In other words, there is no such thing as a “leading Indicator”.
They simply show us that a trend has been established and thus help us to pick the direction that we should be looking to trade in accordance with Price Action.
As such you should never use more than 1 Momentum Oscillator and 1 Price Exhaustion Oscillator. If you use multiple Oscillators you will always be behind the trade, meaning that the move up or down will be over before you can react and enter trying to follow the trend. Multiple Oscillators create what is known as “Analysis Paralysis”.
Your MENTOR should show you which OSCILLATORS to choose and how to use them properly.
So before joining any forex brokers, forex charts or forex opportunity, it is extremely important to find and talk to a forex mentor that will teach you these parts of technical analysis in order for you to be able to trade for profit.
The author of this article is a proven 7 year forex trader and has trained new and experienced traders all over the world. For more information on this incredible forex mentor and the remaining 2 key elements visit www.1yearforexmentor.com
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