We all know, trend if our friend. If you intend to become a profitable trader in the Forex market, we must learn to trade with the major trend. Sadly, very few traders in Singapore knows the perfect way to execute a trade in favor of the major trend. They always make things overly complex and loses a big portion of their investment.
If you intend to make a consistent profit in the Forex market, you need to understand the fact, comparative market analysis is the most vital skill to develop your trading skills. Without learning the proper method of trading, it will be really hard to make a profit from this market.
So, how do we trade with the major trend? This is where the Fibonacci trading strategy comes into action. The market is not always moving in the same direction. Even in a strong trend, you will spot massive retracement. The pro traders use the Fibonacci retracement tools to filter the best potential trading spot in the market.
Key Retracement Level
Those who are using the Fibonacci retracement tools for the first time might not understand how this thing works. The idea is very simple and all you need to do is use the key swings. To find the bullish retracement level, drag the first point from the key swing low to high. In the case of bearish retracement level, you need to drag it from the most recent swing high low. Though there are many retracement levels you need to execute trades at the 50% and 61.8% retracement level.
Using the Price Action Signal
The pro traders never set pending orders at the key retracement level. They use the simple price action confirmation signal to execute high-quality trades at the key retracement level. Though learning the details of the price action trading strategy is hard, still you can master this technique by using the free Forex demo account.
Learn the psychological reason behind the formation of each major candlestick and you will never have to memorize the candlestick pattern. Things might seem a little bit complex at the initial stage but you can always take advantage of the demo account. Demo trade the market for a few months and try to execute the trade at the key retracement level using the price action confirmation signal.
Managing the Risk Exposure
A Fibonacci trading strategy is extremely profitable and it allows the retail traders to make a decent profit from this market. Being a novice trader, you need to understand the fact, trading is all about probability. So, if you execute high-risk trade, chances are very high you will lose your entire investment.
Regardless of the quality of the trade setup, you need to limit your risk exposure by following the basic rules of investment. Never risk more than 2% of your account balance. Try to trade the market with less stress and always be prepared to embrace the losing orders. Follow the guideline of the professional traders and you will understand the proper method of trading.
Learn from Your Mistakes
You will make tons of mistakes while demo trading the market. Losing trades are nothing but an opportunity to learn new things. Analyze the losing trades and find the weakness in your trading system. Some of you might be using the Fibonacci tools in the lower time frame but it’s a great waste of time.
You need to analyze the market data in a higher time frame to find high-quality trade setups. Think twice before you execute any trade. Learn about the major news so that you can scale your trade and take the right decision at any market condition. And never lose confidence in the trading profession. Be a confident trader and trade the market with proper discipline.