Always Draw Correct Trendlines
Learning currency trading is like building a new car from scratch without an instruction manual for new traders. Many of them acquire quality parts like brakes, wheels, motors, seats, steering wheels etc to build the car.
In order to become a successful trader you need right parts with right instructions to put them together. After all, a part such as a $2.00 gasket can make a big difference and bring your car to a screeching halt.
You should understand that forex trading is very different from trading stocks. Companies can file for bankruptcies like GM or Goldman Sachs or Enron. Companies can go completely out of business taking their share value to zero in the stock markets. However in case of currencies, there is no threat of a country going bankrupt or doing out of existence in a few weeks.
Interest rates, trade balances and budget deficits play a role in determining the price of a currency. What can happen is that interest rates, trade balances and foreign capital inflows can cause severe economic pressures on a currency! This can create sudden changes between the currency values relative to other currencies in the forex markets. When that happens, it can be an incredible fortune making opportunity for savvy, educated currency traders.
Learning how to spot a trend that can last from a few hours, several days or several months can create an enormous financial return for the skilled and educated trader. You need to learn how to find the current trend before you enter the markets.
Learn to always trade in the direction of the market. Fighting a trend is like swimming against the current and getting drowned. Traders make many mistakes and the biggest one is trading in the wrong direction.
If you are an active trader and you dont have the trading software that has the moving trend line indicator, you will need to learn the skill of drawing correct Trendlines. An incorrectly drawn trendline can mean the difference between making and losing money in a trade.
There are three types of trendlines that you should learn how to draw. 1) An Inner Trendline. 2) An Outer Trendline. 3) A Long Term Trendline. These three trendlines form on all time frames. In both uptrends and downtrends! You will need them in your trading.
Draw a straight line connecting support levels without penetrating bodies or wicks of a candle in any uptrend. Correctly drawn trendlines can predict future levels of potential support in an uptrend as well as future levels of resistance in a downtrend.
Draw inner uptrendlines by finding the last two support levels and drawing the line from left to right. Likewise, draw the outer uptrendline by starting at the far left of the chart. Move to the right connecting the majority of the support levels with a straight line.
Go on a larger time frame like daily or weekly and draw the longer term trendline by connecting the levels of support starting from the far left of the chart moving forward. The market reacts the same way in a downtrend as an uptrend but in an opposite direction. Instead of a support level, use the resistance level to draw trendlines in a downtrend. That means all the rules are the same but in the opposite direction. - 23311
In order to become a successful trader you need right parts with right instructions to put them together. After all, a part such as a $2.00 gasket can make a big difference and bring your car to a screeching halt.
You should understand that forex trading is very different from trading stocks. Companies can file for bankruptcies like GM or Goldman Sachs or Enron. Companies can go completely out of business taking their share value to zero in the stock markets. However in case of currencies, there is no threat of a country going bankrupt or doing out of existence in a few weeks.
Interest rates, trade balances and budget deficits play a role in determining the price of a currency. What can happen is that interest rates, trade balances and foreign capital inflows can cause severe economic pressures on a currency! This can create sudden changes between the currency values relative to other currencies in the forex markets. When that happens, it can be an incredible fortune making opportunity for savvy, educated currency traders.
Learning how to spot a trend that can last from a few hours, several days or several months can create an enormous financial return for the skilled and educated trader. You need to learn how to find the current trend before you enter the markets.
Learn to always trade in the direction of the market. Fighting a trend is like swimming against the current and getting drowned. Traders make many mistakes and the biggest one is trading in the wrong direction.
If you are an active trader and you dont have the trading software that has the moving trend line indicator, you will need to learn the skill of drawing correct Trendlines. An incorrectly drawn trendline can mean the difference between making and losing money in a trade.
There are three types of trendlines that you should learn how to draw. 1) An Inner Trendline. 2) An Outer Trendline. 3) A Long Term Trendline. These three trendlines form on all time frames. In both uptrends and downtrends! You will need them in your trading.
Draw a straight line connecting support levels without penetrating bodies or wicks of a candle in any uptrend. Correctly drawn trendlines can predict future levels of potential support in an uptrend as well as future levels of resistance in a downtrend.
Draw inner uptrendlines by finding the last two support levels and drawing the line from left to right. Likewise, draw the outer uptrendline by starting at the far left of the chart. Move to the right connecting the majority of the support levels with a straight line.
Go on a larger time frame like daily or weekly and draw the longer term trendline by connecting the levels of support starting from the far left of the chart moving forward. The market reacts the same way in a downtrend as an uptrend but in an opposite direction. Instead of a support level, use the resistance level to draw trendlines in a downtrend. That means all the rules are the same but in the opposite direction. - 23311
About the Author:
Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading and swing trading stocks and currencies. Discover A Revolutionary New Forex Robot. Develop your own Forex Trading System.
posted by Mr. Forex at
5:37 AM
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