Making Big Bucks in the Forex Market

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In the Forex market there are the technicians and fundamentalists. Fundamentalists are the traders that utilize fundamental analysis in their trading. They argue that for a trader to make substantial profits from the Forex market, he has to research a company exhaustively from stem to stern while keenly dissecting annual financial statements, comparing price earnings and other ratios, studying markets and competition to know if the company is a buy or sell. For fundamentalists, determining the worth of a company in the future by looking at the company’s stock chart is like trying to ride a motorcycle facing backwards. According to fundamentalists, the price does not give you any idea where the market is going but just where it has been.

On the flip side, technicians argue that analyzing a company from stem to stern is a waste of time; by the time a trader is completing to access the data the market will have already changed. Technicians only have to analyze the charts to know whether it is a buy or a sell. Using technical analysis help traders to make big bucks however you have to know how to use technical analysis appropriately to soar high in currencies trading.

In this article, we are going to look into details on how you can chart your way to good tidings in the Forex market using technical analysis.

 

Trade Valid Data

 

Technical analysis is designed to get odds in favor of traders and for a trader to trade successfully he needs meaningful data. Therefore, instead of day trading, look for trades that last a week or long term trend follow. Day traders never win big bucks because all short term volatility is random. Do not just use daily charts but utilize the weekly charts too to spot major trends.

 

Understanding Support and Resistance

 

All Forex traders who have made it big in the trading of currencies have a good grip of support and resistance. Trade in valid levels of support and resistance starting with weekly chart to see whether they line up with the daily levels to make a well calculated buy or sell decision.

 

Have a Good Grip of Breakout Methodology

 

While support and resistance can hold, they can break as well. A majority of major trends in the currency market usually take place when there is new market highs and not market lows. Many traders do not like buying new highs as they feel that they have missed a bit of the move. Though this holds water, these trends simply accelerate away and you should be prepared to grit your teeth and enter the trade.

 

Use Momentum Appropriately

 

Will support or resistance hold or break? You cannot tell with certainty and as such you should use momentum to your advantage. Whenever you enter a trade in the Forex market, your view should be supported by price momentum always. The best indicators to use for this purpose are Relative Strength Index (RSI) and Stochastic. These technical indicators will help you to time your trade better to get the odds on your side and make big bucks. If you are using Forex technical analysis to trade, never trade without incorporating momentum.

 

Keep It Simple

 

The trading system should be simple. Simple systems work best since they have fewer elements to break and also are more robust in real time trading.

Be Disciplined and Patient

 

Discipline and patience are paramount to trade successfully in the Forex market. You need to exercise patience and not just trading for the sake of it. Do not lose discipline and hurry for profits, when you enter a trade maintain discipline and ensure that you place a stop where necessary. Always have a realistic target.

 

All the best in your trading!!