Smart people are one step ahead in the retail trading industry. They always take smart moves and manage their trades efficiently. We all know trading is one of the most competitive markets in the world. To make yourself comfortable in the trading business, you need to study a lot. Many traders keep on losing money even after trying their best. Does that mean trading is not for all? Well, the answer greatly depends on your financial condition. To trade the market, you need to invest the money you can willingly lose. Those who are thinking to start trading with borrowed money should never join the retail trading industry.
Now you know the prime criteria to become a professional trader in the market. Today, we are going to give you some amazing guideline which will allow you to master the art of technical analysis. Once you master this technique, you should be able to take the trades in a standard way.
Selection of the asset
Before you move to the technical analysis part, you need to know about the asset selection process. Though the majority of novice traders start with the major currency pairs, they start trading the cross pairs with the hope that they will make more money. But the price movement in the cross pairs is very chaotic and it is tough to analyze the market data. So, if you intend to learn technical analysis in the cross pairs, you are walking on the wrong path. It is always better to learn things easily as it helps to prevent frequent mistakes at trading.
Support and resistance level
Identify the support and resistance level should be your first step in learning the technical details. For that, you need a demo account from the top brokers like Saxo capital markets. While drawing the support and resistance level, try to analyze the market data in a higher time frame. A support level should have a cluster of candles below that level. The cluster of candles will limit the downward movement of the price. On the contrary, a resistance level should have a cluster of candles above that level and it will limit the rally of the price. Once you learn to identify the support and resistance level, you need to move to the trend identification phase.
Trend identification phase
Identifying the trend in the Forex market is a daunting task. Even professional traders often fail to identify the trend properly. But to make things easier, we will give you a simple technique. Instead of relying on different time frames, you should be analyzing the data in a daily time frame. Use the 100 periods moving average as your prime indicator. The slope of the moving average will give you a clear direction regarding the trend. If the slope is positive, the trend is bullish. On the contrary, when the slope is negative, you should be looking for a short trading opportunity since the trend is bearish.
Learning the candlestick pattern
The Candlestick pattern is often considered an advanced trading technique. To find reliable trade signals at the important support and resistance level, you need to use the candlestick pattern. Executing the trades based on the Japanese candlestick pattern is often known as the price action trading method. Instead of learning about the complex pattern, learn about the pin bar. A bullish pin bar is a single candlestick pattern that has a small body and long tail facing south. On the contrary, the bearish pin bar has a small body with a tail facing north.
Look for these patterns at the important support and resistance level to execute the trades. And try to analyze the data in a higher time frame as it will improve your overall trade execution process. If you find things hard, you may learn these factors in the demo account so that you don’t have to lose any real money.