Learning the technical details of the Forex trading industry is a little bit complex. Some of you might think technical analysis is not required to become a successful trader. Just by using your emotions and gut feelings you can easily earn huge amount of money. But always remember emotions has no place in the investment business. Try to learn the technical details of the market by reading books and articles. If necessary go for the paid trading course. But those if you devote yourself you won’t have to spend any money to become technically sound. Today we will share the key things you need to know as a technical trader.
Support and resistance level
Support and resistance are the key trading zones. Starting from the novice traders ending with the expert Aussie traders, everyone uses the simple support and resistance level. When the price of certain asset hits major support level you need to look for buying opportunity.Similarly when the price face resistance, the sellers try to make a profit by shorting the asset. But how do you find the key support and resistance level?
You need minimum three connecting points to draw a support or a resistance line. Try to connect three significant highs of the market to have your resistance zone. When the price of a certain asset test such zone, look for bearish price action confirmation signal to short the pair. Similarly, you will need to connect three lows to have your precise support zone. A bullish price action confirmation signal at the key support level is an excellent opportunity to execute long orders.
Use of Fibonacci retracement tools
We all know the trend is our friend. The moment you start investing money in the Forex market is the very moment you should follow this proverb. Trading CFDs is very easy to provide that you know how to trade with the market trend. Though there are many ways of riding a trend the best way is to use the Fibonacci retracement tools. Use the most recent highs and lows of the market to find your key retracement levels. Though there are many retracement levels the expert traders in Australia only execute a trade at 38.2%, 50% and 61.8% retracement level. But do you think you will just place pending orders at these level to make a profit? You have to wait for the price action confirmation signal or else it will be very hard for you to make a profit.
Advance knowledge of risk management
The technical traders should have a clear understanding about the associated risk in trading. Risk management is often known as the Holy Grail in the Forex trading industry. It allows them to trade the market with managed risk. So how much should risk per trade? To be honest, the expert traders never risk more than 2% of their account balance. The novice traders might think trading is nothing but dealing with emotions. But in reality, you will have to keep your emotions in control and trade this market with discipline. Never risk more than 1% of your account balance since a few losing trades might ruin your career.
Focusing on your trading system
The new traders should always trade the market with strict discipline. As a retail trader, if you think this market is a shortcut way to become a millionaire, you are making a big mistake. You have to do all the hard work and trade the market with discipline. Think about your past trades and identify your mistakes. Never forget trading is nothing but your business. Set a realistic goal in this market and don’t become a trade addict. Try to keep your trading chart clean and develop a strong mentality. Always believe in your trading strategy and focus on the market trend. Keep yourself synchronized with the latest market change and you will see a positive change in your trading strategy.