Wednesday, 11 September 2019

3 Basic Forex Trading Techniques that Must Be Learned

Many forex traders look for powerful strategies that can lead them to instant financial freedom. In fact, learning forex from stage to stage is something that absolutely must be done. Even experienced traders still have to keep learning so that they can always adjust to changing market conditions. A strategy that is going well today can suddenly cause massive losses next week, so adjustments always need to be done.

However, there are three basic forex trading techniques that are almost always constant. These three basic forex trading techniques need to be remembered by every trader.

1. "Trade with the Trend"
For forex traders, the trend is the most familiar friend who if we try to fight it might become dangerous. Indeed there are forex trading techniques "against the trend", but in general in trading, it will be easier to harvest profits if "trade with the trend".

Roughly speaking, this means, if there is an uptrend, the trader should only open "buy" positions. Conversely, when a downtrend (down trend), you should only open short positions only.

However, if you are more careful then you also need to know how to trade amid three trends in forex: bullish (when the price of a pair rises), bearish (when the price of a pair goes down), and sideways / ranging (when prices move up and down in a range narrow). Every trader needs to know what a "trend" is and how to detect the beginning and end of a trend. This understanding is very important because it relates to how we will trade a currency pair later.

2. "Buy at Support"
Literally, this means that a trader is recommended to open a "buy" position on a pair when the price is at the lowest level (support level). With the expectation that after reaching the lowest level then the price will reverse, then here the trader must learn the support-resistance theory well.

One of the most recommended forex trading techniques is to buy when the bullish price is being corrected. As can be seen in the picture below, even when the bullish trend prices do not go up smoothly continue. Several times, the graph "corrected", backward before then rising again. Well, in those moments it is often considered the best way to "buy" a forex pair.

How to know if the price will go up again or continue to turn down? For this, it is necessary to learn and practice various techniques to recognize support-resistance.

3. "Sell at Resistance"
Contrary to point two, "sell" positions should be opened when the price is at the top (resistance level), where the price will reverse from up to down. Here too, is a good step to "sell" when the bearish trend is being corrected.

For example the GBP / USD forex pair is falling. For a few moments, prices will continue to decline, but later there will be a moment when prices will seem to turn upside down. Such "corrections" are sought by traders, because if the situation is right then the price is not going up continuously, but resuming the initial trend, namely bearish.

Sounds easy? Try first on a demo account.

Many forex trading techniques sound easy to read, but difficult to apply. One tip given by almost all trading masters is that all trading techniques should be tested first on a demo account. In the demo account, before investing old age savings for forex trading, we can practice with virtual money. Often also, to apply these 3 simple forex trading techniques, technical analysis learning is also needed as the main support.

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