To become a successful trader if you are new, you should immerse yourself completely in the subject in order to find your edge. If you already a winning at trading than you should know exactly what your edge is.
Even the advanced traders find it difficult to interpret and trade the sharp moves often seen in the forex markets. Learning to read and interpret price action can be a huge advantage for you.
In a steep decline, one should be careful to measure the reaction of the longs. You must know if the move has the chance to turn into a rout.
Look at the reaction of the longs as soon as the rate begins to go south, this way you may be able to determine if the market is sitting on a large number of long positions. In case, the spike is followed by a sharp V recovery, you should avoid shorting the pair.
More buyers entering the market at lower levels tells you that the market is not heavily long and traders are seeing it as an opportunity to buy low. These lower prices mean bargain prices for you if you wish to accumulate long positions.
Moving averages (MAs) are among the oldest, true and tested indicators. Widely used moving averages are the 50, 100 and 200 day MAs.
Moving averages are lagging indicators and relate with the past price action. MAs can be used effectively in day trading for entering and exiting positions in one way markets.
During times of sharp price moves, it becomes difficult for the traders to enter a position as retracements are far and few. This makes most of the traders confused and forces them to start taking arbitrary decisions.
Moving Averages can be used as dynamic support and resistance levels in such situations. This will give results superior than the static support and resistance levels used by majority of the traders.
The advantages of using MAs this way gives you dynamic levels to trade off and gauge price action. MAs can help you avoid using arbitrary levels when you should take profit.
Even the advanced traders find it difficult to interpret and trade the sharp moves often seen in the forex markets. Learning to read and interpret price action can be a huge advantage for you.
In a steep decline, one should be careful to measure the reaction of the longs. You must know if the move has the chance to turn into a rout.
Look at the reaction of the longs as soon as the rate begins to go south, this way you may be able to determine if the market is sitting on a large number of long positions. In case, the spike is followed by a sharp V recovery, you should avoid shorting the pair.
More buyers entering the market at lower levels tells you that the market is not heavily long and traders are seeing it as an opportunity to buy low. These lower prices mean bargain prices for you if you wish to accumulate long positions.
Moving averages (MAs) are among the oldest, true and tested indicators. Widely used moving averages are the 50, 100 and 200 day MAs.
Moving averages are lagging indicators and relate with the past price action. MAs can be used effectively in day trading for entering and exiting positions in one way markets.
During times of sharp price moves, it becomes difficult for the traders to enter a position as retracements are far and few. This makes most of the traders confused and forces them to start taking arbitrary decisions.
Moving Averages can be used as dynamic support and resistance levels in such situations. This will give results superior than the static support and resistance levels used by majority of the traders.
The advantages of using MAs this way gives you dynamic levels to trade off and gauge price action. MAs can help you avoid using arbitrary levels when you should take profit.
About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading and swing trading stocks and currencies. Learn Currency Trading. First Trade Your Forex Demo Account!
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