Tag Archive : forex

Forex Trading Strategy That Made $3000 Weekly

Why Having an Effective Trading Strategy is Important

Participating in forex trading presents an opportunity to take part in a global marketplace with significant potential. Due to its popularity with day traders, forex has even gained a reputation for turning quick profits. In truth, it’s just as complex and competitive as any other world marketplace. To not only succeed but also succeed consistently, you need to understand the market and hone your trading strategy.

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I Made $10,000 Monthly With Position & Range Trading Strategy

  1. Position trading

is a strategy in which traders hold their position over an extended time period—anywhere from a couple of weeks to a couple of years. As a long-term trading strategy, this approach requires traders to take a macro view of the market and sustain smaller market fluctuations that counter their position.

Tools Used

Position traders typically use a trend-following strategy. They rely on analytical data (typically slow moving averages) to identify trending markets and determine ideal entry and exit points therein. They also conduct a fundamental analysis to identify micro- and macroeconomic conditions that may influence the market and value of the asset in question.

Pros and Cons

The success or failure of position trading hinges on the trader’s understanding of the market in question and their ability to manage risk. To lock in profits at regular intervals (and thereby mitigate potential losses), some position traders choose to use a target trading strategy.

 

2. Range Trading

Range trading is based on the concept of support and resistance. On a price action graph, support and resistance levels can be identified as the highest and lowest point that price reaches before reversing in the opposite direction. Together, these support and resistance levels create a bracketed trading range.

In a trending market, price will continue to break previous resistance levels (forming higher highs in an uptrend, or lower lows in a downtrend), creating a stair-like support and resistance pattern. In a ranging market, however, price moves in a sideways pattern and remains bracketed between established support and resistance thresholds.

When price reaches the overbought (resistance) level, traders anticipate a reversal in the opposite direction and sell. Similarly, when price approaches the oversold (support) level, it’s considered a buy signal. Finally, if price breaks through this established range, it may be a sign that a new trend is about to take shape. Range traders are less interested in anticipating breakouts (which typically occur in trending markets) and more interested in markets that oscillate between support and resistance levels without trending in one direction for an extended period.

Tools Used

Range traders use support and resistance levels to determine when to enter and exit trades and what positions to take. To do so, they’ll often use banded momentum indicators such as the stochastic oscillator and RSI to identify overbought and oversold conditions.

Pros and Cons

Trading the dips and surges of ranging markets can be a consistent and rewarding strategy. Because traders are looking to capitalize on the current trend rather than predicting it, there is also less inherent risk. That said, timing is exceptionally important. Oftentimes, an asset will remain overbought or oversold for an extended period before reversing to the opposite side. To shoulder less risk, traders should wait to enter into a new position until the price reversal can be confirmed.

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How I made $10,000 Monthly with Trendline

Trend Lines

Trend lines are probably the most common form of technical analysis in forex trading.

They are probably one of the most underutilized ones as well.

If drawn correctly, they can be as accurate as any other method.

Unfortunately, most forex traders don’t draw them correctly or try to make the line fit the market instead of the other way around.

In their most basic form, an uptrend line is drawn along the bottom of easily identifiable support areas (valleys).

This is known as an ascending trend line.

In a downtrend, the trend line is drawn along the top of easily identifiable resistance areas (peaks).

This is known as a descending trend line.

How do you draw trend lines?

To draw forex trend lines properly, all you have to do is locate two major tops or bottoms and connect them.

What’s next? Nothing.

Uhh, is that it? Yep, it’s that simple.

Here are trend lines in action! Look at those waves!

Types of Trends

There are three types of trends:

  1. Uptrend (higher lows)
  2. Downtrend (lower highs)
  3. Sideways trend (ranging)

Here are some important things to remember using trend lines in forex trading:

It takes at least two tops or bottoms to draw a valid trend line but it takes THREE to confirm a trend line.

 

The STEEPER the trend line you draw, the less reliable it is going to be and the more likely it will break.

Like horizontal support and resistance levels, trend lines become stronger the more times they are tested.

And most importantly, DO NOT EVER draw trend lines by forcing them to fit the market. If they do not fit right, then that trend line isn’t a valid one!

 

 

 

 

 

 

6 Tips For Supply and Deman Trading

Wyckoff’s “accumulation and distribution” theory describes how trends are created. Before a trend starts, price stays in an “accumulation” zone until the “big players” have accumulated their positions and then drive price higher. They can’t just swamp the market with their full orders because it would lead to an immediate rally and they weren’t able to get a complete fill, thus reducing their profits.

It is reasonably safe to assume that after price leaves an accumulation zone, not all buyers got a fill and open interest still exists at that level. Supply and demand Forex traders can use this knowledge to identify high probability price reaction zones. Here are the six components of a good supply zone:

1) MODERATE VOLATILITY

A supply zone typically shows narrow price behavior. Lots of candle wicks and strong back and forth often cancel a supply zone for future trades.

The narrower a supply/demand zone before a strong breakout is, the better the chances for a good reaction the next time typically.

2) TIMELY EXIT

You don’t want to see price spending too much time at a supply zone. Although position accumulation does take some time, long ranges usually don’t show institutional buying. Good supply zones are somewhat narrow and do not hold too long. A shorter accumulation zone works better for finding re-entries during pullbacks that are aimed at picking up open interest.

Good supply zones are somewhat narrow and do not hold too long. A shorter accumulation zone works better for finding re-entries during pullbacks that are aimed at picking up open interest.

3) THE “SPRING”

The “Spring” pattern is a term coined by Wyckoff and it describes a price movement into the opposite direction of the following breakout. The spring looks like a false breakout after the fact, but when it happens it traps traders into taking trades into the wrong direction (read more: Bull and bear traps). Institutional traders use the spring to load up on buy orders and then drive the price higher.

4) STRONG FORCE LEAVING THE ZONE

This point is important. At one point, price leaves the supply zone and starts trending. A strong imbalance between buyers and sellers leads to strong and explosive price movements. As a rule of thumb, remember that the stronger the breakout, the better the demand zone and the more open interest will usually still exist – especially when the time spent at the accumulation was relatively short.

When price goes from selling off to a strong bullish trend, there had to be a significant amount of buy interest entering the market, absorbing all sell orders AND then driving price higher – and vice versa. Always look for extremely strong turning points; they are often high-probability price levels.

5) FRESHNESS

If you trade of supply areas, always make sure the zone is still “fresh” which means that after the initial creation of the zone, price has not come back to it yet. Each time price revisits a supply zone, more and more previously unfilled orders are filled and the level is weakened continuously. This is also true for support and resistance trading where levels get weaker with each following bounce.

6) AMATEUR SQUEEZE

The Rally-Range-Drop scenario describes a market top (or swing high), followed by a sell-off. The market top signals a level where the sell interest got so great that it immediately absorbed all buy interest and even pushed price lower.

The amateur squeeze allows good and patient traders to exploit the misunderstanding of how market behavior of consistently losing traders. It is reasonably safe to assume that above a strong market top and below a market bottom, you’ll still find big clusters of orders; traders who specialize in fake breakouts know this phenomenon well.

How I made $2000 Daily with Psychological Levels

Psychological levels, also known as key levels, are specific price points on a currency pair that traders and investors believe are important. These levels are based on human psychology and market behavior rather than any technical or fundamental analysis.

Psychological levels are often round numbers that end in 00 or 50, and they can act as support or resistance levels.

For example, the psychological level of 1.5000 on the EUR/USD currency pair is a key level because it is a round number and has historical significance. Traders and investors often pay attention to this level because it is seen as a significant point of support or resistance. If the price of EUR/USD reaches 1.5000, it may experience a sudden shift in trading volume as buyers and sellers enter the market.

How do psychological levels affect forex trading?

Psychological levels can have a significant impact on forex trading because they reflect the sentiment of the market. When a currency pair approaches a psychological level, traders and investors may become more cautious or confident in their trading decisions. This can lead to increased trading volume, volatility, and price fluctuations.

Psychological levels can act as support or resistance levels, depending on the direction of the price movement. If the price of a currency pair is approaching a psychological level from below, it may act as a support level. Conversely, if the price is approaching a psychological level from above, it may act as a resistance level.

For example, if the price of USD/JPY is approaching the psychological level of 100.00 from below, traders and investors may become more bullish on the currency pair. This could lead to increased buying volume, pushing the price above the psychological level. Conversely, if the price of USD/JPY is approaching 100.00 from above, traders and investors may become more bearish on the currency pair, leading to increased selling volume and a possible drop in price.

How can traders use psychological levels in forex trading?

Traders can use psychological levels in forex trading by incorporating them into their trading strategies. One common strategy is to set buy or sell orders at psychological levels, anticipating a breakout or reversal in price. Traders can also use psychological levels as targets for profit-taking or stop-loss orders.

It is important to note that psychological levels are not always accurate indicators of market behavior. Traders should use other technical and fundamental analysis tools in conjunction with psychological levels to make informed trading decisions. Additionally, traders should be aware of potential market manipulation that can occur around psychological levels, as large traders may try to trigger stop-loss orders or create false breakouts.

In Summary

Psychological levels are an important concept in forex trading that reflect the sentiment of the market. These levels can act as support or resistance levels and can have a significant impact on trading volume, volatility, and price fluctuations. Traders can use psychological levels in their trading strategies but should not rely solely on them for making trading decisions. By understanding the concept of psychological levels, traders can gain a deeper insight into the dynamics of the forex market and make more informed trading decisions.

How I made $7000 weekly with this Support and Resistance Trick

Plotting Support and Resistance Levels

One thing to remember is that support and resistance levels are not exact numbers.

Often times you will see a support or resistance level that appears broken, but soon after find out that the market was just testing it.

With candlestick charts, these “tests” of support and resistance are usually represented by the candlestick shadows.

At those times it seemed like the price was “breaking” support.

In hindsight, we can see that the price was merely testing that level.

So how do we truly know if support and resistance were broken?

There is no definite answer to this question.

Some argue that a support or resistance level is broken if the price can actually close past that level.

However, you will find that this is not always the case.

Let’s take our same example from above and see what happened when the price actually closed past the 1.4700 support level.

In this case, the price had closed below the 1.4700 support level but ended up rising back up above it.

If you had believed that this was a real breakout and sold this pair, you would’ve been seriously hurtin’!

Looking at the chart now, you can visually see and come to the conclusion that the support was not actually broken; it is still very much intact and now even stronger.

Support was “breached” but only temporarily.

To help you filter out these false breakouts, you should think of support and resistance more as “zones” rather than concrete numbers.

It’s like when someone is doing something really strange, but when asked about it, he or she simply replies, “Sorry, it’s just a reflex.”

When plotting support and resistance, you don’t want the reflexes of the market. You only want to plot its intentional movements.

Looking at the line chart, you want to plot your support and resistance lines around areas where you can see the price forming several peaks or valleys.

Other interesting tidbits about support and resistance:

  • When the price passes through resistance, that resistance could potentially become support.
  • The more often price tests a level of resistance or support without breaking it, the stronger the area of resistance or support is.
  • When a support or resistance level breaks, the strength of the follow-through move depends on how strongly the broken support or resistance had been holding.

Make $2000 Weekly with Support and Resistance

“Support and resistance” is one of the most widely used concepts in trading.

Strangely enough, everyone seems to have their own idea of how you should measure support and resistance.

Let’s take a look at the basics first.

Look at the diagram above. As you can see, this zigzag pattern is making its way up (a “bull market”).

 

When the price moves up and then pulls back, the highest point reached before it pulled back is now resistance.

 

Resistance levels indicate where there will be a surplus of sellers.

When the price continues up again, the lowest point reached before it started back is now support.

Support levels indicate where there will be a surplus of buyers.

In this way, resistance and support are continually formed as the price moves up and down over time.

The reverse is true during a downtrend.

In the most basic way, this is how support and resistance are normally traded:

Trade the “Bounce”

  • Buy when the price falls towards support.
  • Sell when the price rises towards resistance.

Trade the “Break”

  • Buy when the price breaks up through resistance.
  • Sell when the price breaks down through support.

A “bounce” and “break”? Say what? If you’re a little bit confused, no need to worry as we will cover these concepts in more detail later.

 

Learn the Basic of Forex Trading and make $10,000 weekly

What is FOREX?
Forex is usually abbreviated as FX, derived from Foreign Exchange. It
means simultaneous buying and selling of currencies.
Currencies are the instrument with which transactions are conducted.
Every nation in the world has its own currency peculiar to it

As long as people will continue to travel from one nation to the other,
the exchange of one currency with the other will continue to happen.
This therefore erases the doubt in our mind about the lifespan of Forex
trading.
Forex Trading will always involve two currencies at a time.
For instance:
EURUSD buy means that we are buying EUR and at the same time
selling USD. By this, we are saying EUROPE economy is stronger
than United State Economy. Forex market is dynamic in its movement
and this is as a result of different macro and micro economic activities
that play out in the country at that particular point in time. This also
goes a long way to give indication of the strength of the currency under
consideration.

  1. Currency Pairs

A currency pair is the quotation of two different currencies, with the value of one currency being quoted against the other. The first listed currency of a currency pair is called the base currency, and the second currency is called the quote currency.

Currency pairs compare the value of one currency to another—the base currency (or the first one) versus the second or the quote currency. It indicates how much of the quote currency is needed to purchase one unit of the base currency. Currencies are identified by an ISO currency code, or the three-letter alphabetic code they are associated with on the international market. So, for the U.S. dollar, the ISO code would be USD.

Major Currency Pairs

A widely traded currency pair is the euro against the U.S. dollar or shown as EUR/USD. In fact, it is the most liquid currency pair in the world because it is the most heavily traded.1 The quotation EUR/USD = 1.2500 means that one euro is exchanged for 1.2500 U.S. dollars. In this case, EUR is the base currency and USD is the quote currency (counter currency). This means that 1 euro can be exchanged for 1.25 U.S. dollars. Another way of looking at this is that it will cost you $125 to buy 100 euros.

There are as many currency pairs as there are currencies in the world. The total number of currency pairs that exist changes as currencies come and go. All currency pairs are categorized according to the volume that is traded on a daily basis for a pair.

The currencies that trade the most volume against the U.S. dollar are referred to as the major currencies, which include:

Minor Pairs

Currency pairs that are not associated with the U.S. dollar are referred to as minor currencies or crosses. These pairs have slightly wider spreads and are not as liquid as the majors, but they are sufficiently liquid markets nonetheless. The crosses that trade the most volume are among the currency pairs in which the individual currencies are also majors. Some examples of crosses include the EUR/GBP, GBP/JPY, and EUR/CHF.

Exotic Pairs

Exotic currency pairs include currencies of emerging markets. These pairs are not as liquid, and the spreads are much wider. An example of an exotic currency pair is the USD/SGD (U.S. dollar/Singapore dollar).

2. BASE AND QUOTE CURRENCY
You can recall that in our definition of Forex, we did say that it is a
simultaneous buying and selling of one currency against the other. The
buy or sell action taken, affects first currency in the pair and the
second at the same time. For instance, if we buy EURUSD, we are
actually buying the EUR and at the same time selling the USD.
In this case, the first currency is the base while the other currency
that appears at the back is the quote currency. The quote currency
serves as reference point to determine the value of the base currency.
If the current price of EURUSD is 1.20000, it means that for every 1
EUR you need 1.20000 dollar to buy it.
If the price of EURUSD increases to 1.2100 therefore means that more
units of USD is needed to obtain one unit of EUR.
By implication, the EUR has strengthened against the USD and the
same way we can say the USD weakened against the EURO

3. PIPs AND POINTS

“PIP” stands for Point in Percentage. More simply though, a pip is what
we in the FX would consider a “point” for calculating profits and loss.
It’s a standardize unit and a smallest amount by which a currency
quote can change.
For USD related currency, it is always 0.0001
For JPY related currency, it is 0.01

4. Bid

A bid is the exchange rate that a market maker quotes to buy a specific currency pair. 

5. Offer

The offer is the exchange rate that a market maker quotes to sell a particular currency pair. A market maker’s offer rate will generally be higher than their bid rate.

6. Spread 

Unless you tell them your desired trading direction, forex market makers and brokers generally provide bid and offer quotations for the exchange rate of the base currency expressed in terms of the quote currency. The difference between this two-way quote is known as the dealing spread or the spread. Widening the dealing spread relative to the Interbank forex market provides an income stream for forex brokers. Some brokers also charge additional trading costs, such as a commission or a per-trade fee.

7. Lots

A lot is a trading unit that represents a minimum transactable amount of a currency pair traded at an online broker or on a futures exchange, although lots are generally not

 used among those operating in the over-the-counter Interbank forex market. As a retail forex trader, common lot sizes include standard lots of 100,000 base currency units, mini lots of 10,000 units, micro lots of 1,000 units and nano lots of 100 units. 

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