The Most Important Consideration When Trading

The most important consideration in trading is the direction of the overall trend. This is especially true in Foreign Exchange as trends tend to stay in place longer than in any other market. The reason is that FX reflects actual money moving from one economy to another. Whether the flow of money from one economy to the other is caused by trade between the two economies or investments (capital flows), once those natural forces are in place, they can stay in place for extended periods of time. It is sort of like a fully loaded supertanker in the open ocean at full speed, even if you cut the power, it will continue to drift in that same direction for an extended period of time.

How do we determine the overall trend? The first step is to just look at the chart. The strongest trends should be visible from across the room. A currency pair’s position in relation to the 200 Day Simple Moving Average is also a popular method. Support and Resistance lines can help the trader look for entries in the direction of the overall trend.

 


On the Chart above, we can see that the USD/CHF is in a clear downtrend. The trend is visible from across the room. Prices are well beneath the 200 Day Simple Moving Average. If we connect the highs, we can see short term and long term resistance lines that can help us when looking for specific entries.

However, there are other tools that can give us insight into the relative strength of the overall trend. The ADX or Average Directional Index is another tool a trader can add to their arsenal. The ADX is unique in that it measures the strength of the trend alone. In other words, if one pair is in a strong uptrend and another pair is in a strong downtrend they will both have high ADX readings.

To apply the ADX indicator, right click on any Marketscope chart and select add indicator. ADX is located under the Trend Strength section. I would suggest using the standard default setting of 14. Here is a general guideline of how to read the ADX indicator:

0-25 = Absent or weak trend

25-50 Strong Trend

50-75 Very Strong Trend

75-100 Extremely Strong Trend

 


Once the ADX is applied, it gives us the ability to see a little deeper into the true nature of the trend. For example, on the USD/CHF chart above, we can see that during the last short term down move, ADX was well above 60. However, during the recent decline, ADX only managed to move to the 50 area. While these both are still considered very strong trends, we can see that the first circle down move was stronger than the second circle down move. This means that while the trend is strong, it could be weakening in relative terms.


Attached Files:

Posted By ashleybutler : 06 October, 2020
Related Article

Today my post is only for the old trader and not for the new thader in Forex. I will share with you today a new way to earn from Forex, it is not a forum posting or IB or affiliate program. This is Forex Cashback. Let us know in detail what it is -This cash-back is arranged by a company called FX Spread Back. There are also many more Cash-Back but it is not possible to talk to everyone at once so today's post is about FX Spread Back - to get cashback you have to open an account on their website first.Anyway let's find out how this cash-back worksWhen you trade in Forex, the Forex Spread / Broker Commission deducts from your trade. If you are under an IB, he gets some commission from that spread. Usually it is 30 to 50%.If IB shares that commission with you straight away where you get a share from IB Commission then it is Cash-Back.In this case IB is FX Spread Back. You have to register in FX Spread Back then click on the link provided by them and register in the broker of your choice. Start trading now every week will be credited to your CashBack FX Spread Back account you can withdraw at any time through Neteller or Skrill.In order to get cash back you need to have your broker account under a company which is a partner company of that forex broker, if you already have an account then you have to bring your account under that broker. Your FX Spread Back account will be credited. Which will be updated every week and you can pick it up.This money will compensate your loss a lot and increase the amount of profit. It is related to your trade volume, so whatever the profit or loss in your forex trading, you will get CashBack (Money).FX Spread Back account to go to this site: www.fxspreadback.comThe image below shows how FX Spread Back works -   Some common questions -How do I raise money -FX Spread Back pays through Neteller.Is there any Barti Spread to be charged -No. No Barti Spread will be charged at all but if your current IB has charged Barti it will be reduced.I can also take Cash Back from my IB -- So maybe in many cases it can be but it will not be professional, and FX Spread Back Spontaneous Professional you will get your report every week how much income how many lot trades etc They will be able to give much more Cash Back than this. Then they also provide some more services such as free VPS trading signal free community etc.They have affiliate systems -- Yes, you can earn money by referring your friends.Is there a minimum or maximum limit for deposits or withdrawals?- No No No Maximum Limit No Deposit or Withdraw No Hidden ChargeI already have an account with XM / FXCC / FXTM / SAXOBANK / FXPRO / INSTAFOREX / OCTAFX / FXDD / XGLOBAL (either one or two) brokers. To open- In fact it is different from broker to broker. In this case you can do it by registering in FX Spread Back then contact them. They will fully cooperate. You can contact in live chat or email to [email protected] that support FX Spread Back - XM, FXCC, FXTM, SAXOBANK, FXPRO, INSTAFOREX, OCTAFX, FXDD, XGLOBALNote: Those who are old or those who need to register immediately. If you don't need it, it is better not to waste your time by registering unnecessarily.FX Spread Back Website: www.fxspreadback.comFX Spread Back Facebook Page: facebook.com/fxspreadback  

Margin accounts enable investors to use a small amount of money to deal in larger volumes. Using a margin account means that a trader essentially borrows funds to further increase the possibility of a higher return on investment. Margin accounts are used by investors with the leverage provided by the borrowed money; this is to make larger trading positions possible. These margin accounts are also used by currency traders dealing in the Forex market.     Simply put, trading on margin means an investor is trading using short-term borrowed capital.   By using a margin account, investors can arrange deals, as well as trade large amounts by using a small amount of capital. For example, if he wants to invest in positions amounting to $10,000 or even $100,000, he can do so using funds as little as $50 or $100.   Starting Margin Accounts If an investor is interested in trading using a margin account, then he must sign up first with a regular broker, or he can use an online Forex discount broker. After choosing the broker he’ll be dealing with, that’s when the margin account will be set up.   Before the trading process, money should first be deposited into the margin account. The amount will depend on the percentage agreed upon by the broker and the investor. The percentage will usually be around 1 or 2% if the currency units are about 100,000 or more. If the investor deposits 1% for trading, then the remaining 99% will be provided by the broker.   The investor will not be charged interest on his borrowed amount, but if he does not close the position before the agreed delivery date, then the amount will be rolled over, and that’s when interest will be charged, depending on his position.   Margin Calls Brokers of margin accounts use $1000 as security. If the investor he’s dealing with starts to face losses that reach $1000, the broker may initiate margin calls. The broker would either ask the investor to put more money into his account, or just to close the position completely to limit further losses. Some brokers tend to liquidate positions once a margin call is reached.   Risks = Forex Using margin accounts will help you deal in larger amounts that your capital usually cannot support. Be sure to check all the conditions that come along with margin accounts; seek additional advice if needed. Forex carries a high degree of risk; however, profit will not be made if you’re not ready to deal with that risk.

Not to mention at the outset what Expert Advisor (EA) is, it is an automated method where you don't have to open or close a trade, you don't have to do any analysis and the system will do everything automatically.   Today we will discuss what are your advantages for those who want to trade in this method, since this method is a fully automated method, so you do not have much work here, but the advantages for which you can use this method are:   You sleep EA will trade for you   The Forex market is a 24-hour market, so it is probably not possible for anyone here to sit in front of trade all the time, or to analyze day and night, or even to fail to do a good analysis. There is no trading decision according to your trade balance by the computer program section written instruction method automatically analyzes the different logic. So you don't have to do anything, it doesn't matter if you are sleeping or monitoring the trade, by measuring the market volatility in different sessions, he starts trading on his own, close to losing and profit.     This method is not emotional   In manual trading, when traders trade on their own, some factors make their base emotional, such as fear, apprehension, self-confidence, etc. Which has an effect on the trade and leads to unintended losses in the trade. But when trades are conducted with automated robots, there is no such opportunity. Because robots are operated in a certain way where there is no room for any other thought. Since the robot has a specific trading plan, there is no question of where to stop or profit emotionally.   You can run backtest faster:   With Robot Trading you can take backtests of your trades very easily. That means you can easily know how safe your trading is or how much it benefits you.   Can make decisions with market movement at a faster time   Deciding in manual trading on fast time price movement becomes a little difficult or absolutely impossible for some. Nor is it possible to make a decision by analyzing the market so quickly. But robots or automated methods can do this very easily. In the fast price movement market, robots can also trade on 1-5 minute charts effortlessly and slowly take the desired profit.   It is not prone to malpractice   When it comes to making trade decisions, people can be very emotional about the trade and make mistakes and the wrong calculation can make the trade negative which is unrealistic. So in this case the robot can easily get rid of all those risks.   Manual trading and robot trading are two completely different trading theories, which have nothing to do with each other. In terms of management, good analysis based trading is able to give you much more profit than auto trading.


Post your comment