For a long time, the Forex market has created a huge number of trading methods.
Finding the strategy that specifically suits you is one of the main steps to achieving success in the Forex market.
And it’s worth remembering that successful traders don’t use anything magical in their operations. Everything has long been invented for both a novice trader and a successful trader.
The main task for beginners is to choose a fairly easy strategy and strictly follow their principles and rules.
So what does a beginner need to know to trade profitably?
It is difficult for a beginner to determine price levels and trade them correctly.
There are no specific rules in this since the price does not draw clear points, but rather forms zones.
Many traders use support and resistance levels in their trading and for beginners the main task at the beginning of the journey will be the concept of selling from resistance and buying from support.
There are three types of trading systems based on price levels.
1. If the price moves within the framework of a sideways move, the trader can sell from resistance and buy from support.
2. If there is a prevailing trend in the market, eg bearish, a trader can sell from resistance and wait for support to break through.
3. The same rules work in the bull market, but in a different direction. If the price breaks through the resistance, then this zone becomes a support from which to buy.
Consider the principles of negotiation from price levels.
#1 Understand the market context.
The key to profitable trading of levels is the ability to correctly understand the context of the market.
Downside pressure drives the market through an impulse move that breaks support and creates new lows; in this context, sales strategies will not work well.
That is why it is so important to follow the concept of the market context:
When the market falls, creating new highs and lows, we are talking about an impulsive bearish context.
The correction is created by momentum that is weaker than the main trend.
A sideways movement occurs when both demand and supply are approximately equal and the price cannot move in a certain direction.
As soon as the bulls or the bears take control, the price will make a push in the direction of the strong side.
#2 Top-Down Analysis
The market is governed by large amounts of money, which places great importance on large time lines.
And it is vital for a common trader to know where the smart money is pushing the market.
To do this, it is worth noting strong levels on the monthly, weekly and daily time frames to know exactly where the price is most likely to rally.
On the other hand, if the price is above key levels, then the market is bullish.
#3 Candlestick patterns
All traders use candlestick patterns in their analysis, which are a very strong analysis tool.
Reversal candlestick patterns create an excellent opportunity to enter a trend reversal.
The longer the time frame in which the pattern was formed, the stronger its signal will be.
Knowing the candlestick formations is a very important part of a trader’s professional growth.
#4 Risk management
Any trader must be aware of the risks and be able to control them.
Even though this goes beyond defining the market context, it is still very important.
There are many ways to control risks.
An important rule is to set a stop loss and risk on each position, as recommended, no more than 2% percent.
Hedge fund managers risk an even smaller percentage on each trade, sometimes 1% or even lower.
It is better to grow slowly than to fall quickly.
If you lose 2% of the capital, in the next transaction, in order to get your money back, you will already have to make 4%, which is generally not difficult to do.
But if you lose 50%, you will have to make a 100% profit already, which is unrealistic.
Summarizing the above, you can perform the following sequence of actions:
Identify key support and resistance levels.
Wait for the candle to form in the desired direction.
Stop loss above or below the candlestick pattern.
Take profit is placed at the following support or resistance levels.
Always make sure to use proper money management for each trade, and never take a risk that exceeds the return.
Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I’ll be glad 👩💻