If
you strive to become a successful Forex trader, you need to create your
personal trading strategy. In the trading practice there is no trading
strategy, which could be equally suitable for all traders. Every trader
should create a trading strategy by himself, which would be suitable for
the trading conditions by all parameters.
There are traders, who are guided only by technical analysis when
trading, while others prefer fundamental analysis. But there are such
traders, who carry out both technical and fundamental analysis in order
to determine the most appropriate points of the market entry and exit.
Technical analysis supposes a concept, that prices are moved by trends.
There is an established phrase “trend is your friend”. All the
movements on the market have their images, which were studied over
years. An absolute understanding of these trends is a guarantee of a
correct and efficient trading strategy. There are various analytical
instruments, which help to understand all market movements. If you are a
beginner, you need to study well every instrument separately in order
to get practical knowledge and understanding of these instruments. As
soon as you begin to understand one instrument action, you should start
using it and at the same time study other instruments.
Support and resistance levels are used in many trading strategies. The
support is applied to the price level, which is repeatedly seen as the
basis – when the price gets to this level, it has a trend to the price
rise. The resistance levels are upper prices, a currency trading is
seldom implemented here. Support and resistance levels contain basic
price movements only over some period of time. When currency prices
break through the price support and resistance levels, they continue to
rise. In order to find the support and resistance levels it is necessary
to analyse price diagrams of not broken support and resistance levels.
The diagram analysis may be implemented during any period of time. The
usage of support and resistance levels helps a trader to determine when
it is better to enter or leave the market.
Moving average is one more instrument for the trading strategy
creation. Simple moving average SMA shows the price in the period of
time determined by you. Moving averages are used to remove short-term
price fluctuations; it helps to ascertain a broad picture of the market
events. Traders use moving average to determine a trend of prices future
increase or downturn. If price lines intersect above the moving
averages, this trend will likely continue on the market. And vice versa,
price lines, which cross below the moving averages, will likely
continue descending movement.
To perform a full-fledged analysis of the Forex market, a trader should
have several trading instruments in his/her arsenal. If several
indicators show that the market began to move in a certain direction, a
trader may rather confidently enter the market, relying upon one
indicator’s signals.
A fundamental analysis can be performed according to the same scheme.
Every trading strategy, developed by a trader, must give clear guiding
principles about the time, when it is better to enter or leave the
market, and what market movements are expected in the near future. The
creation of the individual trading strategy in combination with
technical analysis will help you to become more than just a successful
trader on the Forex market.
Article Source: http://www.mt5.com
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