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Thread: What factors are there to notice before putting your trade?

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    Arrow This post is sponsored by a content payout program available to anyone to participate. What factors are there to notice before putting your trade?

    What factors are there to notice before putting your trade?

    Though trading on financial markets entails high risk, still it can generate extra income on condition that you apply the right approach. By choosing a reliable broker such as InstaForex you get access to the international financial markets and open your way towards financial independence. You can sign up here.


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    FACTORS TO NOTE BEFORE PULLING THE TRIGGER IN FOREX TRADING

    The major reason the forex trader comes into the forex trading business is to earn profits. To be able to do that with the best results, the forex trader needs to open and close trades. Opening trades as well as closing them seem a very easy task since all that it requires is just a click of the mouse. However, successful forex trading goes more than that. Certain factors needs to be considered in ones effort to profit from the high-risk forex market. In truth no one in his right senses will come into the forex trading business ill-prepared and expect to make good progress in the market. I will assume anyone trading the currencies market would have acquired more than the basic knowledge about the business. It is only when a good result has been achieved in the demo practice account, that the trader should venture going into the real live money trading. Find below the factor to see before opening a trade.

    1. PULL THE TRIGGER WHEN THERE IS GOOD REASON TO DO SO: Putting ones trade should not just be because a trade has to be made. A trade will only worth being taken if there are very good reasons to take the trade. The habit where traders just open a trade based just on the fact that they have been waiting for long should be avoided. Also, the need to earn profits at all cost should not be embraced as such lures the trader into opening trades that are not worthwhile.

    2. PRESENCE OF A NEAR-PERFECT SETUP: Though no setup is 100% guaranteed to supply the expected result, it is a must for a trader to wait for the best setup which goes in line with his chosen bias of the market. Several setups could be seen, but not all will be worthwhile to be traded. Successful forex trading has a lot to do with knowing the right trading setups to take.

    3. RISK TO REWARD MUST BE GOOD: I often see traders risking hugely just to earn a little profit. It is not uncommon to see traders putting on a trade where the expected earning is 20 pips against a risk of 80 pips. Worse still some even risk a whole trading account for just 20 pips. The right setting will be to risk a little while targeting large profits. In effect, the expected earning from a trade should be much more than the risk of loss. If i will be doing the appropriate thing, then i will take trades which give me a reward of 3 against a risk of 1.

    4. THERE MUST BE A STOP LOSS POINT: Sure, when i open a trade i want to get some good profits. But since no signal is sure to deliver a guaranteed result, i will not be doing the right thing if i open a trade where i could not discern the point of stop loss. Hence, before putting a trade, the forex trader will need to identify the stop loss point where he would accept that the trade is wrong. If that point could not be ascertained, there is no point pulling the trigger.

    5. THE TAKE PROFIT POINT MUST BE IDENTIFIED: The forex trader can not leave a trade running forever. There must be a point where he sees the profit he has should be booked. Failure to note that level and take action could lead to a winning trade becoming a loser. It is a well-known fact that in the forex market price does not go in the same direction for ever. Hence it becomes very important to set the target profit price point.

    6. BE CERTAIN YOU ARE NOT FALLING INTO EMOTIONAL TRADING: Trading just because of emotions should be avoided. Though this requires strict discipline, the forex trader who watches out for this before opening a trade will most times be much safer.

    7. CHECK THE TIMING: Checking the timing of setup about to be traded matters a lot. For example, even if you are a technical trader, you need to check if your setup is not been traded when a news release in approaching as that could disrupt the technical settings. Also, there is the need to consider market closing hours, especially Friday night when the market closes for the week. It might be counter-productive if i open a deal an hour before market closes.

    8. LOT SIZE SELECTION: Lastly, but not the least, the forex trader will need to select a good lot size to use in opening the trade with special reference to the good money management policy. Though there are no hard and fast rules in regard of this, most professionals advice not risking more than 2% of total funds in one trade.
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    FACTORS TO CONSIDER BEFORE EXECUTING A TRADE IN THE FOREX MARKET

    As much as being a profitable trader is possible in the trading business, the bulk of a trader's success is dependent on his ability to identify the best time to execute a trade. Being able to identify when it is right or wrong to enter into a trade in the forex market then has a lot to do with paying attention to the important factors associated with trade entries.


    The following can be identified to a professional extent to be factors that a trader should put into consideration before executing trades in the forex market:


    1. Market session: taking note of the market session that a trader analyses as well as executes a trade is absolutely important. A trader has to be sure of the time of the day that he is entering into a trade, this way he is well informed as per the level of market volatility and knows what to expect with movement of price in the market. In the event where more than one trading session is running, the trader is much more aware that he can experience rapid movement of prices because of the presence of liquidity associated with more traders in the market. This is one factor that a trader should always try to put into consideration when planning to take a trade in the forex market.

    2. Currency pair traded: identifying the currency pair to trade comes after the market session that is in place is already known. This way, a trader becomes informed of when it is best to trade a certain currency pair. Some currency pairs enjoy more liquidity during a specific market session than every other session in the market. It is important that a trader is absolutely aware of what session he is in and what level of liquidity to expect before he executes his trade.

    3. Confluence: this is a very important factor that a trader has to take note of before executing any trade whatsoever in the forex market. If a trader cannot achieve confluence with his market analysis, then there is no point entering into such trade. With confluence, a trader would be able to understand that he stands a better chance of winning in the market rather than executing a trade with no confluence and just hoping that trade goes his predicted direction.

    4. Presence of fundamentals: the worst thing for a trader is to get caught up with fundamental news releases. Before executing any trade, traders are expected to verify that no high impact news is about to hit the market because such news would always have a way of disrupting their market analysis.

    5. Risk to reward: a trader should not just execute a trade for the sake of it or because it seems like a winning trade. Traders are supposed to understand that they are to take trades that only promises a better risk to reward for them. The reward on a trade executed should be at least two times the size of the risk of such trade on the worst case scenario.

    Though trading on financial markets entails high risk, still it can generate extra income on condition that you apply the right approach. By choosing a reliable broker such as InstaForex you get access to the international financial markets and open your way towards financial independence. You can sign up here.


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    What are the factors to notice before you put in your trade
    There are several factors a trader needs to notice before he can put his money on trade in the forex market in order to avoid losing is investment in the forex market. Some of the several factors you need to notice before putting your money on a trade are:
    1. When to enter the market: A trader can spot when to enter the market by making use of technical analysis trading strategy. For example, when you are trading breakouts, a trader might notice a huge trading forming and also spot an immediate breakout, some traders might decide to purchase the breakout.

    2. When to exit the market: This is another factor a trader is expected to notice before putting your money on any trade. A trader needs to know when he will exit the market and also making profit from the trade. A trader needs to know when he is expected to exit the market even before entering the market.

    3. Deciding on the amount of capital you are willing to risk in the trade : Before you enter any trade in the forex market. You need to be able to evaluate yourself and know the amount of money you can risk in the forex market and you can afford to lose, not the money that will affect you if you suffer loss in the trade.

    4. Risk/reward when entering and exiting the market: The money the trader is willing to risk in the market must be relative to the profit he is aiming to make at the end of the trade. For example, you can be willing to risk a certain amount of money in the market and aiming to make 3 times higher than the money you are risking to trade. Which means your reward to risk is 3:1.

    Though trading on financial markets entails high risk, still it can generate extra income on condition that you apply the right approach. By choosing a reliable broker such as InstaForex you get access to the international financial markets and open your way towards financial independence. You can sign up here.


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    Which factors have to be considered before opening the trade?

    Before the forex trader can open a trade we will need to consider some things if he will not just get into a too risky trade. The reason for opening a trade is to make profit so it is goes beyond words that factors which will enhance profitability have to be considered critically. In my few years of trading experience i have come to learn that successful trades are more possible when these factors are considered. I will therefore make a list of the necessary factors to consider before taking a trade.
    1. Trade after thorough analysis: Trades will only be reasonable when the forex trader has analysed the market comprehensively making use of all the various ways of analysing the forex market, basically technical analysis, fundamental analysis and the psychology of trading. When these are put into consideration, the generated trading signal is tradable.
    2. Determine the amount to risk in the trade: Before opening a trade the trader will need to determine how much risk he is willing to take on the trade. Trades needs not be opened with too high risk since the forex business is very risky and one can lose the trade. The trader should not have a high risk appetite. It is always better to risk a little amount from ones investment. It is after the risk to be taken on the trade has been determined that the forex trader can now take the next action.
    3. Determine the stop loss: The trader has to determine the stop loss to use in his trade based on the signal gotten from the trade setup that is about to be traded. It will be best if the stop loss is lesser than the take profit. This means the trader should open a trade where the potential profit expected is more than the possible loss from the trade.
    4. Be certain the time is right: After the trader has come up with his trading sentiment he needs to be sure of the right time to open the trade. Opening a trade at an inappropriate time will not be good as such could lead to unnecessary losses been experienced. But if the timing is good when opening the trade the chances of success in the trade is heightened.
    5. Watch the fundamentals: The fundamental most times impact prices heavily so it will be in order to monitor news releases before opening a trade so as not to be exposed to huge volatility. Traders will need to consider the possibility of loss too when opening a trade and should not only focus on the possible profits.
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    What factors are there to notice before putting your trade ?
    There are many factors you should put into consideration before placing any trade in the Forex market, which are :
    • Take a look on the economic calendar :
      It is very important to take a look on the economic calendar before placing any trade, in order to know well whether there will be important news their results will be released soon or not. Because if your trading depends only on the technical analysis, the best is to avoid the trading during releasing results of the important economic news, such as interest rate, gross domestic product (GDP), consumer price index (CPI), ...etc.
    • Ensure that you will enter the market on the right session :
      There are three main sessions in Forex market, which are London session, New York session, and Asian session. And not all the trading strategies work well during all these sessions. But there are many strategies works well during sessions that have high liquidity, such as London session and New York session. And there are another strategies work well during sessions that has low liquidity, such as the Asian session. So, you should trade on the session that can be suitable to your trading strategy. And you can know times of these trading sessions from the image below :
    • Ensure that rules of your trading strategy was achieved :
      It is very important to only enter the market when you find a good entry point. And the trading strategy is the responsible for determining the best entry points in the market. So, before opening any trade, you should ensure that all rules of your trading strategy are achieved to enter the market from good entry point.
    • Identify your exit point and lot size :
      The trading plan is the responsible for determining level of risk that you should take per each trade. So, you should identify your the exit point that you will use for your trade. Then you can identify the lot size that you should use for your trade based on rules of your trading plan, to secure your self and your account from facing any huge losses if the market moved suddenly against your opened trade.
    • Ensure whether your trade is with price trend or not :
      There are three main types of trend in Forex market, which are the primary trend, the secondary trend, and the minor trend. So, if you are a long-term trader, you should follow the primary trend. And if you are a short-term trader, you should follow the secondary trend. But if you are a scalper trader, you should follow the minor trend. And you can know the difference between these three types of trends in the following link : trend types. And based on type of your trading, you can identify the best time frame that you can use during your trading. And the image below shows you the difference between those three types of trends :


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    THE FACTORS TO NOTICE BEFORE PLACING AN ORDER.

    It is good to look before one leaps. Looking in this sense means putting one's senses to use in discerning the details of technical analysis before placing a position. For that to take place, the following factors are important to take note of;

    Cognition Factor: Trading forex requires mental capacity than of a trader of it than his fingers can work in clicking mouse to place positions. Therefore, he should assess himself to know his own level of perception, memory retaining capacity, ability to think to manipulate situations so as to derive goodness from them. He should check his own ability in reasoning well.

    Learning Factor: This is one of the components of knowledge. Once learning stopped, experience is not expected to increase and that is why knowledge is described as the psychological result of man's perception, learning, thinking and reasoning. All those factors are contained, psychologically, in the mental process of a man. A trader of forex should assess himself how fast or slow he learns about the trade so as to know if he is mastering the details of it or not.

    Temperamental Factor: This another thing to be considered in doing self analysis before the trader begins to trade the market. How the trader responds to external stimuli is very important because it is the same as the way he will keep responding to market fluctuations. It should be noted that this trade is not good for him who acts so impulsively. It is not good for the fearful type. It is only good for those who are rational and cautious before reacting to situations that arise.

    Self Control: This is the sign of inner streght to control oneself, action and reaction and follow them through without changing one's mind. The following emotions should not be allowed to overrule before placing positions; anger, revenge, fear, overcaution, greed and impatience.

    Confidence is needed for trading to make profit. That is only got through proper analysis of the market. Therefore, it is not good to place market through guessing.

    Though trading on financial markets entails high risk, still it can generate extra income on condition that you apply the right approach. By choosing a reliable broker such as InstaForex you get access to the international financial markets and open your way towards financial independence. You can sign up here.


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    When to enter a trade in forex

    Thereís no direct way to answer this question as there are different factors you will need to consider depending on different attributes of the trader involved. When it comes to deciding an entry point in forex trading, a trader needs to consider his trading strategy, size of his capital, market structure, market conditions (ranging or not) and several other factors.

    Before we go into the details, letís talk about what a forex entry point is. It is the level or price at which a forex trader executes his or her trade (buy or sell). Choosing an entry point or confirmation signal is a complex thing because it will decide the profitability of the trade. Now, the first and the most important thing you will need to know before choosing an entry point is your trading strategy.

    What to consider
    • As you know, there are several trading strategies used by forex traders. You can trade breakout, candlestick patterns, reversals etc. Letís say you want to focus on breakout strategy. You can make use of breakouts as an entry signal. Breakout trading has to do with identifying key levels and making use of these memories as entry points. If you want to make use of this strategy, you have a fair knowledge of price action. This entry point is quite simple and straightforward, and can be used by newbies. Look at the picture below.


      Click image for larger version

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    • Another important factor you might need to consider before making your entry is the size of your capital. It is important to put into perspective how much leverage your capital can go through. Leverage is a double edged sword, as much as it can give your account edge when it comes to profits, it can also blow your account if you end up on the wrong side of the market. So before making that market execution, ask yourself how much youíre willing to risk?

    • Ensure thereís no major news release; speaking from experience Iíve been a victim of an unforeseen news release. I wonít say itís unforeseen per se because I didnít check the fundamentals before making my entry. When the news was released, it made the currency pair weak and there was a massive reversal which affected my trade significantly. So before you make an entry, make sure thereís no major news like NFP, CPI, PMI, Interest rate and GDP.

      5177D130-FF05-4D52-9359-D85BD1534A17.jpeg

    Though trading on financial markets entails high risk, still it can generate extra income on condition that you apply the right approach. By choosing a reliable broker such as InstaForex you get access to the international financial markets and open your way towards financial independence. You can sign up here.


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