Amazing three trading strategies to follow the trend

What is the most important thing you need before you decide to enter a trade? Do you need investment or the charts? Well, it is undeniable that you need both of these but the most valuable thing for you would be to speculate the market. Now, why is this market speculation so important? It helps you to find the most suitable point at which to enter your trade. 

Let’s say, you bought some stocks with your investment to make some investment. You will not find a single trader who doesn’t trade to make a profit. So, you will undoubtedly look for opportunities to sell your previously bought stocks at a higher price. But how would you know that you are going to sell your stocks at a higher price since you are trading online? Here comes the necessity of speculation to know the perfect market condition to sell your stocks.

When you virtually keep an eye on the market, you will find out there are some changes in the market value of the product. Sometimes the price may go higher than your cost price while sometimes the price may go lower. When the price goes lower it will not be a favorable condition for you to sell your stocks as the difference between your selling price and cost price will be negative and you will face a loss. That’s why, to avoid such losses, traders use some trendlines to know where the price is moving. By looking at the trendlines, they become aware to find their preferable entry points. Therefore, traders need to follow the trendlines without making any mistakes as a slight mistake can lead to huge losses in this sector. Traders use various strategies to keep up with the market trends and here are some of the most popular tips for you.

Fix one main trendline

It is no wonder that a trendline is the completion of multiple higher and lower price values. But when the trend remains bullish where a maximum of the price remains higher high and higher low, the trend is recognized as an uptrend. On the other hand, a downtrend is marked when the trend remains bearish or the price remains within lower high and lowers low. It can a bit of a challenge to follow a big picture trendline as the market is constantly fluctuating and is difficult to interpret for the traders. There may remain several trendlines in the main trendline but for a big picture of the market, you should have a main trendline in the sidelines.

Use a channel to follow the trend

Now the trends are mainly identified by smoothening all the roughly sketched price values. As the price fluctuation is very high in a chart, it is not possible for a trader to visually recognize what a trend may look like. Here comes the importance of channeling the day-to-day price movement into one single straight line. Now, this single straight line will indicate a trend.

The rookies need to learn channel trading method in demo environment. Use this link to get a demo account from Saxo. Learn to trade the channel by using the free resource without risking any real money.

Identifying a breakout

Trends are not eternal. They come to an end. But how to identify the end of a trend? For identifying the upsurge of a trend, you need to look for breakouts. In a trend, there may be times when the price value may move in the opposite direction for some moment and again go back to its previous direction. But after moving back and forth for some time, the value finally breaks the ongoing trends and completely moves in the opposite direction. This is termed a breakout in trading. These breakouts are important to identify a change in the trends. By speculating a breakout, a trader can predict the market value of a commodity beforehand and thus make decisions accordingly.

Traders need to execute all their works and strategies only after a trend has begun its action. So, to get a better result by following a trendline, a trader should also remain vigilant when speculating and predicting the market movement.

Candlestick Chart

candlestick chart (also called Japanese candlestick chart) is a style of financial chart used to describe price movements of a security, derivative, or currency. Each candlestick typically shows one day, thus a one-month chart may show the 20 trading days as 20 candlesticks.

A candlestick chart is simply a chart composed of individual candles, which traders use to understand price action. Candlestick price action involves pinpointing where the price opened for a period, where the price closed for a period, as well as the price highs and lows for a specific period.

How To Read Candlestick Chart

Candlestick Chart

Open price:

The open price depicts the first price traded during the formation of the new candle. If the price starts to trend upwards the candle will turn green/blue (colors vary depending on chart settings). If the price declines the candle will turn red.

High Price:

The top of the upper wick/shadow indicates the highest price traded during the period. If there is no upper wick/shadow it means that the open price or the close price was the highest price traded.

Low Price:

The lowest price traded is the either the price at the bottom of the lower wick/shadow and if there is no lower wick/shadow then the lowest price traded is the same as the close price or open price in a bullish candle.

Close Price:

The close price is the last price traded during the period of the candle formation. If the close price is below the open price the candle will turn red as a default in most charting packages. If the close price is above the open price the candle will be green/blue (also depends on the chart settings).

The Wick:

The next important element of a candlestick is the wick, which is also referred to as a ‘shadow’. These points are vital as they show the extremes in price for a specific charting period. The wicks are quickly identifiable as they are visually thinner than the body of the candlestick. This is where the strength of candlesticks becomes apparent. Candlesticks can help traders keep our eye on market momentum and away from the static of price extremes.

Direction:

The direction of the price is indicated by the color of the candlestick. If the price of the candle is closing above the opening price of the candle, then the price is moving upwards and the candle would be green (the color of the candle depends on the chart settings). If the candle is red, then the price closed below the open.

Range:

The difference between the highest and lowest price of a candle is its range. You can calculate this by taking the price at the top of the upper wick and subtracting it from the price at the bottom of the lower wick. (Range = highest point – lowest point).

Having this knowledge of a candle, and what the points indicate, means traders using a candlestick chart have a clear advantage when it comes to distinguishing trendlines, price patterns and Elliot waves.

How To Use & Read

There are various ways to use and read a candlestick chart. Candlestick chart analysis depends on your preferred trading strategy and time-frame. Some strategies attempt to take advantage of candle formations while others attempt to recognize price patterns.

Interpreting single candle formations

Individual candlesticks can offer a lot of insight into current market sentiment. Candlesticks like the Hammer, shooting star, andhanging man, offer clues as to changing momentum and potentially where the market prices maytrend.

As you can see from the image below the Hammer candlestick formation sometimes indicates a reversal in trend. The hammer candle formation has a long lower wick with a small body. Its closing pricing is above its opening price. The intuition behind the hammer formation is simple, price tried to decline but buyers entered the market pushing the price up. It is a bullish signal to enter the market, tighten stop-losses or close out a short position.

single candle formations

Traders can take advantage of hammer formations by executing a long trade once the hammer candle has closed. Hammer candles are advantageous because traders can implement ‘tight’ stop-losses (stop-losses that risk a small amount of pips). Take-profits should be placed in such a way as to ensure a positive risk-reward ratio. So, the take-profit is larger than the stop-loss.

Recognizing price patterns in multiple candles

Candlestick charts help traders recognize price patterns that occur in the charts. By recognizing these price patterns, like the bullish engulfing pattern or triangle patterns you can take advantage of them by using them as entries into or exit signals out the market.

For example, in the image below we have the bullish engulfing price pattern. The bullish engulfing is a combination of a red candle and a blue candle that ‘engulfs’ the entire red candle. It is an indication that it could be the end of a currency pairs established weakness. A trader would take advantage of this by entering a long position after the blue candle closes. Remember, the price pattern only forms once the second candle closes.

bullish engulfing

As with the hammer formation, a trader would place a stop loss below the bullish engulfing pattern, ensuring a tight stop loss. The trader would then set a take-profit. For more forex candlestick charts check our forex candlesticks guide where we go in depth into the advantages of candlestick charts as well as the strategies that can be implemented using them.

Source – dailyfx.com

What Is Candlestick Chart

A candlestick chart is simply a chart composed of individual candles, which traders use to understand price action. Candlestick price action involves pinpointing where the price opened for a period, where the price closed for a period, as well as the price highs and lows for a specific period.

Price action can give traders of all financial markets clues to trend and reversals. For example, groups of candlesticks can form patterns which occur throughout forex charts that could indicate reversals or continuation of trends. Candlesticks can also form individual formations which could indicate buy or sell entries in the market.

The period that each candle depicts depends on the time-frame chosen by the trader. A popular time-frame is the daily time-frame, so the candle will depict the open, close, and high and low for the day.

  • Candlestick charts differ greatly from the traditional bar chart
  • Traders generally prefer using candlestick charts for day-trading because they offer an enjoyable visual perception of price
  • It’s important to understand the key components of a candle, and what they indicate, to apply candlestick chart analysis to a trading strategy

MetaTrader 4 – The Most Popular Forex Trading Platform

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Millions of traders with a wide range of needs choose MetaTrader 4 to trade in the market. The platform offers ample of opportunities to traders of all skill levels: advanced technical analysis, flexible trading system, algorithmic trading and Expert Advisors, as well as mobile trading applications.

Signals and Market additional services extend MetaTrader 4 frontiers. The Signals service allows you to copy trades of other traders, while the Market provides you with various Expert Advisors and Technical indicators that you can buy.

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What Is Forex Liquidity And Volatility..?

What Is Liquidity?

Liquidity refers to how active a market is. It is determined by how many traders are actively trading and the total volume they’re trading. One reason the foreign exchange market is so liquid is because it is tradable 24 hours a day during weekdays. It is also a very deep market, with nearly $6 trillion turnover each day. Although liquidity fluctuates as financial centres around the world open and close throughout the day, there are usually relatively high volumes of forex trading going on all the time.

What Is Volatility?

Volatility is the measure of how drastically a market’s prices change. A market’s liquidity has a big impact on how volatile the market’s prices are. Lower liquidity usually results in a more volatile market and cause prices to change drastically; higher liquidity usually creates a less volatile market in which prices don’t fluctuate as drastically.

Liquid markets such as forex tend to move in smaller increments because their high liquidity results in lower volatility. More traders trading at the same time usually results in the price making small movements up and down. However, drastic and sudden movements are also possible in the forex market. Since currencies are affected by so many political, economical, and social events, there are many occurrences that cause prices to become volatile. Traders should be mindful of current events and keep up on financial news in order to find potential profit and to better avoid potential loss.

Demo Trading vs. Live Trading

Demo Trading Accounts

Demo trading accounts are perfect for traders looking to establish the fundamentals and work on their technique. Beginning on a live account means that there’s the possibility of losing real money as you work out which technique works best for you.

Before moving on to a live trading account, it is a good idea to try out a few different approaches, and practice with a demo account. Demo accounts grant traders the opportunity to develop and test their trading skills, without facing the kind of risks you do on a live account.

Traders who want to iron out the creases in their trade before they hit the live markets have a range of demo accounts to choose from.

Live Trading Accounts

After you’ve refined your skills and experimented with different types of analysis and indicators on a demo account, it is time to switch to a Live Account and start trading with real money! Demo Accounts are great for practice, but Live Accounts offer all the real advantages of the FX markets.

Once traders are ready to move on to the live markets, having established a trading strategy which works for them, they can set up their first Live Account. Like Demo Accounts, there’s a huge range of options available for a trader looking to upgrade their trading from Demo to Live.

What’s Cryptocurrency Margin Trading?

Conventionally, Cryptocurrency trading can only start with a BUY to open order. However, in the form of margin trading, you can start with an order to either BUY or Sell to open. In other words, you can take advantage of the market volatility taking either long or short positions depending on your views. Additionally, margin trading allows the traders to take more Cryptocurrency positions than the amount of funds in the margin account. So-called “Leverage Trading” is widely used and available for the FX, CFDs, and Futures products worldwide.

It is highly recommended to be extra careful when you are trading with the margin accounts. Taking excessive leverage can lead to exponential return that could also result in losses prompting margin calls (or stop outs) when the trader’s equity drops below the minimum required margin. Traders can always contribute more capital to avoid margin calls, however, the risk has to be carefully managed.

Wisebitcoin has adopted variety of Cyrptocurrencies such as Bitcoin, BitcoinCash, Ethereum, Ethereum classic, Litecoin, Ripple, Dash, Monero, Zcash, EOS, Stellar, Augur, Gnosis, Quantum, Cardano and many more. By introducing these Cryptocurrencies to margin trading venue, we strive to take part in advancing the future of blockchain technology.

How to pick the best Forex robots

If you want to gain an understanding of the benefits of Forex robots, spend some time reading genuine customer reviews online. Yes, they can scan millions of charts in just a few seconds, but a high percentage of them churn out incorrect information. They are only robots after all. And robots can only perform as well as their program, and they don’t have the ability to think creatively. Their functionality is limited to past performance and how they have been programmed.

We’d advise traders not to depend on one entirely for conducting all trading activity. Trading requires a high level of human observation and research. Humans are also much better at following economic conditions and keeping up to date with financial news. Robots usually pick out positive trends and trading signals. However, functionality can be hampered by jittery trends or incorrect information. There is also the risk of hackers and viruses messing up the plan.

If robots made it easy to make money trading Forex everyone would be jumping on the bandwagon, and nobody would need to go to work. We agree that a robot can make money, but it is usually for a limited time. Before long it will start losing money and you may even find your account being completely wiped out.

Forex trading requires more than an automated system

To be successful in the market of Forex trading requires more than a little good luck. The most successful Forex traders will have skill and knowledge, visually and analytically. Trading in the financial markets requires practice and is considered by many to be an art. Markets conditions change continuously and only an experienced trader can anticipate when to enter a market and when to steer clear.

We’re not saying you shouldn’t spend your money on robots or automated software, because at the end of the day the decision is yours. However, we would recommend you consider it very carefully, weighing up all the pros and cons. And spend some of your time and money learning about the different trading systems and possibly trying them out with a demo account, before trading for real money.

Robots are a tool for lazy traders, and surely they’re going to take all the fun out of trading? But promises of big profits with little or no effort – what isn’t there to like about that? All we can say is be careful and find out as much as you can before spending your cash. And remember that there is far more enjoyment to be had from trading in the Forex markets than pressing a few buttons and letting a piece of software do all the work.