The most important thing when trading forex is to determine the direction of movement of a currency pair. The tactic of adding is used to quickly increase profits, it should not bring losses. The tactic of adding will not bring big losses if you use stop loss. Stop loss (loss limiter) can be set as small as 3 points. You can experiment with the size of the stop loss. 6, 9, 12 points can be set. Brokerage company EXNESS allows you to set stop loss less than one point. If there is a clearly expressed trend in the market, then there is a high probability of its continuation with small retracements of the rate. In fact, there are always intraday, short-term trends in the forex market. We open a position in the direction of the trend movement, and immediately set the stop loss at 3 points. If the position has gone 10 - 20 points, then we tighten the stop loss at the level of 3 points. This must be done to lock in profits if the short-term trend turns in the opposite direction. You can open another position, tighten it with a stop loss, and after the position has started to make a profit, you need to tighten it in the break-even zone with a stop loss and give it an opportunity to develop. Trading strategies: With a stop loss of 3 pips, the chances of making a profit are increased. We trade currencies in the forex market for profit. Using a stop loss at 3 pips gives you a better chance of earning. For example, you set your stop loss at 30 pips. The trend turns sharply in the other direction and you get a loss of 30 pips plus the size of the spread. If you set your stop loss at 3 pips, then you have 10 times more chances to make a profit. It is impossible to get a loss ten times in a row! To make good money, you need to learn how to enter the market. You need to determine the correct time to enter. Currency pairs are constantly in a certain oscillatory movement. A currency pair very rarely moves without pullbacks in a certain direction. If you look at the price chart of any currency pair, you will see that it takes time to make a profit. 1. You can profit from short-term movements in the foreign exchange market if you open a large trading position! But the larger the trading position, the more you can get a loss. Therefore, it is necessary to enter the market using a stop loss of 3 pips.
It is also important to consider entry times. Good volatility (certain fluctuations) is needed to make a good profit. Each currency pair has its own volatility. On the international currency market, the GBP (British pound sterling) USD (US dollar) currency pair is very volatile. Average daily fluctuations of this currency pair reach 150-200 points. The GBP (British Pound Sterling) JPY (Japanese Yen) currency pair is the most volatile in the international forex market. Therefore, if you want to make good money, then you need to learn how to trade these currency pairs. George Sorros - currency trader, billionaire, 2. You can make money on long-term trends in the foreign exchange market! This method is used by the richest investors in the world! The richest investors in the world know how to correctly determine the time to open a trading position and the time to exit it. The larger the trading position, the more profit you can earn. Leverage allows you to increase your initial capital hundreds of times! Larry Williams is an American trader who earned 1 million 130 thousand US dollars in a year of trading, increased his initial capital of 10 thousand US dollars by 113 times in a year! All you need to make a profit when trading currency, oil, gold, stocks is the correct entry into the market. Successful traders never put money in their trading account at high risk. The best traders in the world allow their profitable position to grow and exit with maximum profit.
If someone thinks that only super-complex techniques using the best indicators can help a trader in his activities in the financial markets, then he is greatly mistaken.
As practice shows, in most cases it is precisely those traders who are successful who do not pursue something newfangled, but use simple, time-tested strategies. About one of theseForex trading strategies we'll talk today.
This trading system is called "Channel Strategy". This strategy is worthy of attention because traders can master it and successfully apply it in trading, regardless of their experience and time spent in the market.
In addition, the undoubted advantage of the Forex channel strategy is its versatility, which allows it to be used on different charts with different time ranges.
• Channel Forex strategy is equally suitable for both intraday traders and those who conclude deals in the long term
But first things first. In the material offered to your attention, we will try not only to outline the technical side of the issue related to the use of this strategy in the market, but also to understand its essence and application features.
Constant price movement in channels
As you know, the foreign exchange market is very dynamic, as evidenced by the constant change in price quotations. The price can move up, demonstrating growth, and then, having changed the direction, go to the phase of decline, after which it practically stops and continues to grow again.
Therefore, if you analyze the dynamics of the foreign exchange market, you will notice that at certain time intervals price movements differ significantly. Conventionally, several types of such movements can be distinguished:
• Trend - a period when price quotes change dynamically in a strictly defined direction.
• Sideways price movement or flat . In this phase, the price practically does not change or fluctuates with insignificant amplitude in a narrow range. This state of the market can be compared to calmness, when there are no obvious prerequisites for any sharp price changes.
• The third type of price movement differs in that during a long time interval the price is, as it were, squeezed by certain boundaries within which it moves. This range is considered to be the corridor we are talking about when using the channel strategy.
Trading in the price channel
To understand the essence of this trading strategyand figure out how to apply it in practice, consider a specific example. Suppose that the trading instrument is the GBP / USD currency pair, which is showing growth, that is, there is an upward price movement in the market.
Paying attention to the figure located above, you can see that the price, in its aspiration upward, periodically rolls back, making a movement within the boundaries of a certain channel. This channel is formed by trend lines, one of which is support and the other is resistance. Since the example shown in the figure is taken in relation to the hourly timeframe, the width of the formed channel is not too large (78 points in total). But even in this case, the price does not leave the channel for several days, moving between the trend lines.
To take advantage of the channel strategy and make a profit, it is necessary to timely determine the moment when the price began to move within the corridor. To do this, you need to draw trend lines through two local minimums and two maximums, respectively. Further, having decided on the boundaries of the channel, you can safely start trading.
In the example (Figure 1), a channel directed upwards is considered. Therefore, in this case it is necessary to buy an asset at the lower border, and at the upper border (although it will be a counter-trend transaction), consider the possibility of selling.
If you trade strictly according to the trend, then when the price reaches the upper border of the channel, it is imperative to fix the profit by closing the deal.
There is one interesting feature to keep in mind when working with a channel strategy. It is noticed that after the price is in the channel, and then breaking through one of its limiting lines, a price movement can be observed opposite to the previous one by an amount equal to or greater than the channel width.
In our example, the channel width was 78 points. As you can see (see Fig. 2), after the price has overcome the lower boundary of the channel, it, having passed some distance downward, tried to return, but encountering resistance on its way (which was previously support when moving inside the channel), turned around and rapidly began to move to opposite direction.
Forex channel strategy
This concludes the conversation about the Forex channel strategy, and successfully apply this technique during the period of price range fluctuations in the Forex market. With its skillful use, the profit will not be long in coming. You just need to not get carried away and remember about the rules of maneuver management.
Profit Forex - Profit calculation and strategy for obtaining it
How is Forex profit formed?
- How is Forex profit formed?
- Forex and income
- Profit Forex - stabilize the trade
- Calculate Forex
The trader's profit is determined by the difference between the buying and selling prices of a currency.
Let's say you bought $ 100 against the Russian ruble at 35 rubles for $ 1, spending 3500 rubles on it. The dollar has grown to 37 rubles, you sell dollars, you receive rubles in the amount of 3700. Your net profit is 200 rubles.
Similarly, everything happens on Forex. Traders buy and sell currencies in the hope that their value will rise or fall in pursuit of speculative goals, i.e. making a profit on the difference in value.
The trader can only correctly determine the direction of price movement - whether the currency pair will rise in price or fall in price.
Forex and income
When opening a position, a trader should always take into account the presence of a spread. The size of the spread is determined by the Forex broker. Part of the spread is the broker's profit, part is transferred to the broker's partners, part goes to a larger broker, which provides quotes to our broker. Despite the presence of these 3 parties, the spreads of good Forex brokers are minimal for major currency pairs: for the EUR / USD pair it is 2 pips, for GBP / USD - 3 pips, etc.
The size of the spread can always be estimated by looking at the trading conditions of the broker on the official website or in the MT4 trading terminal.
Trading classics like Myles Wilson Walker follow these rules:
• first you need to learn how to trade at least to zero.
• further, the trader will learn to trade with a small plus.
• increasing the volume of profits.
Indeed, simply by opening and closing a trading position, we lose on the spread. Let it be 2-3 points on average, but still. As the number of trades increases, our losses will accumulate. The same scalpers open dozens and sometimes hundreds of transactions per trading session. Therefore, it is so important to cooperate with a broker whose trading conditions meet our requirements. Low spread is one of them.
Profit Forex - we stabilize trading
To trade profitably, you need to be able not only to make a correct forecast of the price movement, but also to open, correctly accompany and close a trade deal in time. All this is achieved through awareness and practice. A few general rules to help you stabilize your trading:
1. Trade with the trend.
The trend allows you to get tens and hundreds of points from a deal. Squeeze the movement out to the end. Don't go against the crowd or a locomotive running towards you, follow the trend. In addition, trend trading is easier for beginners to learn than, say, catching corrective pullbacks.
2. Don't be greedy.
Got a profit - close part of the deal or the entire position. Sometimes it is better to close a trade and reduce the risk to zero than to take risks if you are not sure about the subsequent price movement. Our goal is stable long-term profit. We are learning to trade profitably, rather than playing roulette.
3. Remain calm.
Self-control is the basis of a trader's behavior. Not to panic, not to be greedy, not to listen to others and to strictly adhere to the trading rules of your chosen strategy is an art. But only all of the above will lead you to success.
Fibonacci levels are a very interesting tool. Some traders argue that it is almost impossible to trade profitably without these levels. Others stigmatize this method, calling it "unscientific" and subjective.
It should be noted that this analysis tool is quite subjective and does not have an independent meaning. That is, we can use these levels only as one of the elements of the trading system.
Now, we will look at:
1) The history of the appearance of Fibonacci numbers
2) The pros and cons of this method
3) How to build Fibonacci levels correctly
History of the issue
The "discoverer" of the Fibonacci sequence - Leonardo of Pisa, was born, presumably in the 1170s in Italy.
Leonardo was the greatest mathematician of his time and made many useful observations and discoveries. Among other things, he was involved in the breeding of rabbits. Leonardo was interested in the mathematical model that most accurately describes the process of breeding rabbits.
Fibonacci numbers with interesting properties.
1) Each subsequent number is the sum of the two previous numbers.
That is, the number 3 is the sum of the two previous ones (1 + 2). The number 55 is the sum (21 + 34), etc.
2) When dividing the Fibonacci number by the previous number, we get a value equal to (tending to) 1.618
You can find other relationships between Fibonacci sequences.
By the way, the number 1.618 is the so-called "golden ratio".
For example, Egyptian craftsmen used the golden ratio to create
pyramids of Cheops, temples, bas-reliefs, household items and decorations from the tomb of Tutankhamun.
Agree quite unusual that the same numbers (sequences of numbers or their proportions) can be used for the construction of the ancient Egyptian pyramids and to describe the process of breeding rabbits.
Followers of Fibonacci levels believe that these numbers (their ratios, square roots, etc.) are found too often in nature (and ancient art). That is, these are not just numbers, it is a sequence by which the laws of nature, harmony and beauty can be described.
Using Fibonacci Levels in Forex Trading
The Fibonacci levels indicator (grid) is drawn manually on the price chart. Traders are often interested in where can I download Fibonacci levels? You do not need to download them, because they are included in the standard set of indicators on most trading platforms.
For example, to build a grid in the MT4 terminal, press:
Insert => Fibonacci => Lines
In forex trading, the most important value levels are considered:
Fibonacci levels are used to determine price pullbacks. That is, if we see a price impulse, but do not want to join it right now, but want to do it "at a good price", that is, to enter the movement during a price pullback.
Forex market myths
The daily turnover of funds in the OTC foreign exchange market exceeds 4 trillion US dollars. On the Internet, you can find descriptions of various strategies, the use of which supposedly guarantees a monthly doubling of capital. It is not uncommon to find "break-even" strategies based on dubious trading tactics. The most popular of these are the Martingale and averaging methods. For reference: when employing traders in international investment funds, the key requirement is compliance with risk management, which implies refusal to use Martingale and averaging methods in practice. The profitability of such programs is limited only by the imagination of the developers.
In fact, experienced traders, using moderate leverage, do not earn more than 20% per month from trading. This indicator of profitability can even be called outstanding. If there really is an interest in such activities, then it is important to take this fact for granted and not to chase for super-profits, as this leads to a loss of investment.
Another common myth about trading in the foreign exchange market is “ease of making money”. The trading process does seem pretty straightforward. The trader only needs to indicate one of the two potential directions of the price chart movement and make a profit if the forecast turns out to be correct. Many blog authors interested in promoting the services of intermediary companies and dubious brokers, an integral part of cooperation with which there is a conflict of interest, they try to convince novice traders that there is no need to acquire specialized knowledge for successful trading. In fact, in order to achieve a stable profit, it is important to have not only a specialized education, but also certain skills and personal qualities, the priority of which can be called self-discipline. Before starting to trade with real funds, you should study:
- The structure of financial markets;
- Chart display types, as well as the advantages of using Japanese candlesticks and Price Action patterns in trading;
- Understand the principles and features of the application of all methods of graph analysis ;
- Understand the fundamental difference between currency pairs from an analytical point of view.
The list of necessary knowledge to start trading looks daunting, but after reading the presented material to the end, even a novice trader can learn how to steadily profit from the pricing of liquid financial instruments.
Practical Application of Fundamental Analysis in Forex Trading
Fundamental analysis is one of the main types of analytical work with price charts, which involves the study of the most important macroeconomic indicators and their impact on the pricing of national currencies. This type of analysis is regularly criticized by both experienced and novice bidders. This is due to the ineffectiveness of the practical application of this method.
Certainly, some events have a short-term impact on the value of the asset, but it is almost impossible to predict the direction of the price impulse in this case. The fact is that the change in the value of the national currency at the time of the publication of macroeconomic data depends not on the news, but on the delta of trade volumes. Only knowing the difference between the number of buy and sell contracts and the amount of capital is it possible to place the correct order in advance. Similar information is presented on paid analytical platforms:
Lack of market noise, which creates favorable conditions for the effective use of technical analysis and indicators.
Opportunities for the practical application of fundamental analysis. A correctly drawn up trading plan is successfully implemented in 80% of cases. This practice is followed by large investment funds.
Long-term trading positions, depending on the specification of the contracts, will provide the trader with additional passive income on swaps.
The US dollar remains the key currency in the global financial arena, therefore, in fundamental analysis, priority should be given to the economy of this state. To do this, you should pay attention to the S&P 500 stock index, the value of which reflects the dynamics of pricing of the largest US companies operating in different sectors of the economy. Equally important is the Dow Jones Index, which displays the average share price of the largest companies operating in the industrial sector.
Important! It is widely believed among traders that the growth of the US stock market has a positive effect on the growth of the national currency. In fact, the opposite is true. This is due to trading volumes. With a positive dynamics of the value of shares of companies with high capitalization, large investors are investing in the stock market, which in turn provokes capital outflow from the foreign exchange. When the value of stock assets decreases, the national currency reflects an increase. This can be explained by the popular risk diversification strategy. With the decline in prices for shares of large companies, investors begin to more actively buy US government bonds, which has a positive effect on the exchange rate of the national currency.
How can this be applied in practice? It is important to follow the dynamics of the value of large-scale exchange indices and, in case of significant changes, open transactions in the foreign exchange OTC market in the opposite direction.
Description of the strategy and trading rules
For analytical work, you do not need to study the quarterly reports of large US companies. It is important to wait for the formation of a price element, the range of which will be at least 2 times higher than the intraday volatility of the index. The next day, you will need to open a trade in the opposite direction on the USD / JPY pair . It is this tool that is most optimal for the practical application of the strategy for several reasons:
The relatively high intraday volatility provides good profit potential;
The USD / JPY pair is characterized by medium and long-term trends;
When trading this asset, it is possible to determine target levels using the Fibonacci grid, which are worked out in 80% of cases.
In addition, the Japanese yen does not have a significant impact on the US dollar and is in much less demand in the global financial market. In addition, the peak of trading activity for the Japanese currency falls on the Asian session, and the strategy will be traded exclusively during European trading.
To understand the principle of trading, it is recommended to consider several practical examples. The D1 period will be used to work with the S&P 500 chart. You can open the chart itself on the Investing.com website or on the Tradingview online platform. The timeframe of the currency pair does not matter.