The trend is your best friend in any financial trading market, as they say, and using a technical analysis chart for trend based trading is a simple method that at the same time can be very successful. Many traders over complicate the markets, especially at the beginning of their trading career. In fact simple systems can be the most effective.
Most traders use candlestick charts for this purpose, because they are so clear. Bar charts can also be used if preferred. Line charts would not be used.
The first thing to consider is whether the market is rising or falling. This should be visible at a glance, especially if we check several time periods. Use an indicator like Bollinger Bands to make sure that a rising market is not overbought, or a falling market oversold. Once we have this information, which should just take a few seconds to verify, we can begin to draw trend lines on our technical analysis chart. Here's how.
First, draw a straight line through the highest highs and another through the lowest lows.
1. Bullish market
If the two lines are approximately parallel and heading upward, there is an upward trend. The two trend lines can be used as support and resistance lines, which means that we assume the price will remain within the area between the two lines while the trend continues.
So if the price hits the lower line, you could buy on the assumption that it would soon rise again. First of course you would check against another indicator such as the Bollinger Bands and perhaps check in another time period to make sure that there are no signs that the trend is ending.
Some forex traders would also open a trade to sell the currency pair when the price hits the upper line, on the assumption that a retracement is due. This bucks the trend so requires extra care, but can be a profitable strategy.
2. Bearish market
If the two lines are approximately parallel and heading downward, then you have the opposite situation. The trend is downward. Again the lines act as support and resistance lines. This time you would be acting in line with the trend by selling when the price hits the upper line. Buying when it hits the lower line would be bucking the trend in the hope of a retracement.
3. Stable market
If the two lines on the technical analysis chart are approximately parallel and horizontal, the market is relatively stable and there is no trend. You could still trade on the basis of the support and resistance lines but most traders using trend-based systems would wait for a new trend to form.
4. Converging prices
If the two lines are not parallel but drawing closer together so that they would meet at an imaginary point in the future, sooner or later the price will break out and head in one direction or the other. Either wait for the breakout or place conditional orders so that if the price breaks above the limit of the upper line you would buy, and if it breaks below the lower line you would sell.
5. Diverging prices
If the two lines are not parallel but moving farther apart, this indicates that prices are becoming increasingly volatile. Most traders would stay out of this market.
Of course, financial trading is always risky and there are no guarantees. Always test systems thoroughly using the technical analysis chart in a demo account before risking any real money.
Thursday, March 4, 2010
Tuesday, March 2, 2010
Foreign Exchange Trade: 5 Top Tips
The foreign exchange trade market is an exciting place to invest and speculate. Large sums can be made in a short time, although for most traders, even the successful ones, the reality is a little different because of the need to take account of the high risk. So how should a trader act to put themselves on the right side of the equation? Here are our top tips for success in foreign exchange trading.
1. Be realistic
Anybody who gets into forex trading hoping to get rich quick is going to be disappointed. If you go out for maximum leverage on the smallest possible account, you are heading for big losses sooner or later. Forex traders do not get rich quick: they either make money slowly or they lose. We know which option we would pick!
2. Have faith in your system
It is essential to have confidence in your foreign exchange trading system, enough to see it through any bad patches. However, good systems take some finding and testing. Even if a system works for somebody else, you cannot expect to have faith in it until you have thoroughly tested it for yourself. So do not skip this step.
Once you are sure of the long term success of your system, stick with it and do not abandon it just because the market does not act the way you expect all of the time. Sometimes of course there are major shifts in the market and prices may behave differently for a while. If you think that is happening, switch to demo for a while. Don't start on a new system, it would be the worst possible time.
3. If in doubt, stay out
This is one of the catchphrases of the forex market - and probably other financial markets too. It is easy to become impatient when waiting for the trading signals to be just right, especially if we have not seen a trading opportunity in a while. However, this is not a reason for opening a trade too soon. Forex trading is exciting at times and boring at others - the only way to profit is to wait it out.
4. But do not wait too long
Hesitating when the signals are right is almost as bad as jumping in too early. You will be losing some of your profit on each trade if you constantly hover wondering whether or not to act. Your plan should be clear in terms of which charts and indicators you use to check your signal. Having done that, do not start consulting a lot of technical tools. It is time to act.
5. No regrets
Some trades lose and some trades win. Some make profits but not as much as they could have made if only ... (you had closed sooner/closed later/got in earlier etc). Unless you are in the testing process where different variables could make a difference to your final trading system, this kind of 'what if' thinking is a waste of time. No, it's worse than that. It is positively dangerous because it will distract you from the next opportunity and possibly lead you to start tweaking your system for no reason.
When a trade is closed, it is closed. There is nothing to do but record the results on your spreadsheet and move on to the next foreign exchange trade.
1. Be realistic
Anybody who gets into forex trading hoping to get rich quick is going to be disappointed. If you go out for maximum leverage on the smallest possible account, you are heading for big losses sooner or later. Forex traders do not get rich quick: they either make money slowly or they lose. We know which option we would pick!
2. Have faith in your system
It is essential to have confidence in your foreign exchange trading system, enough to see it through any bad patches. However, good systems take some finding and testing. Even if a system works for somebody else, you cannot expect to have faith in it until you have thoroughly tested it for yourself. So do not skip this step.
Once you are sure of the long term success of your system, stick with it and do not abandon it just because the market does not act the way you expect all of the time. Sometimes of course there are major shifts in the market and prices may behave differently for a while. If you think that is happening, switch to demo for a while. Don't start on a new system, it would be the worst possible time.
3. If in doubt, stay out
This is one of the catchphrases of the forex market - and probably other financial markets too. It is easy to become impatient when waiting for the trading signals to be just right, especially if we have not seen a trading opportunity in a while. However, this is not a reason for opening a trade too soon. Forex trading is exciting at times and boring at others - the only way to profit is to wait it out.
4. But do not wait too long
Hesitating when the signals are right is almost as bad as jumping in too early. You will be losing some of your profit on each trade if you constantly hover wondering whether or not to act. Your plan should be clear in terms of which charts and indicators you use to check your signal. Having done that, do not start consulting a lot of technical tools. It is time to act.
5. No regrets
Some trades lose and some trades win. Some make profits but not as much as they could have made if only ... (you had closed sooner/closed later/got in earlier etc). Unless you are in the testing process where different variables could make a difference to your final trading system, this kind of 'what if' thinking is a waste of time. No, it's worse than that. It is positively dangerous because it will distract you from the next opportunity and possibly lead you to start tweaking your system for no reason.
When a trade is closed, it is closed. There is nothing to do but record the results on your spreadsheet and move on to the next foreign exchange trade.
Monday, March 1, 2010
Technical Analysis Tools : Your Best Trading Friend?
The trend is your best friend, as the forex saying goes, and if you want to know when a trend is beginning so that you can jump on and profit from it, you will need technical analysis tools.
Of course, many traders will point out that it is fundamental factors, not technical factors, that drive the currency market. Events like a rise in interest rates or an announcement of a major power's Gross Domestic Product will cause an immediate effect and possibly also a longer term movement. So trends in currency price movements always have fundamental factors at the base.
Nevertheless, most of us are not in a position to make predictions of how the next major financial announcement will go and what will be its effect on the market. Forex traders working from home are not, for the most part, economic or financial analysts. So instead, we use technical analysis tools to show us in clear terms what has been happening in the market recently.
Identifying trends is a simple way to create a profitable forex trading system. All we have to do is see which way the price of a certain currency pair is moving and then buy or sell in order to profit from the movement. That assumes, of course, that the recent movement is a genuine trend that will continue. If it turns out to be just a fluctuation that quickly reverses, we will lose money. So how do we tell the difference?
One of the simplest ways is to draw trend lines on a candlestick chart. This means drawing lines through the highest highs and the lowest lows in a price movement that appears clear from the candlesticks. If the two lines are roughly parallel, this indicates a trend.
If they converge, coming together as if to meet at a point in the future, then this indicates that a breakout is likely, other things being equal. If they diverge, the market is probably too unpredictable for most trend traders to want to get involved.
Once a trading signal has been established in this way, we need to cross check the signal. For this purpose we can use the candlestick chart for a different time period. The normal practice here is to use a longer time period for the cross check, for example one hour if the first lines were drawn on a 15 minute chart, or a full day if the lines were drawn on an hourly chart.
We can also use indicators such as the MACD crossover. These are easily consulted in most broker software systems. Checking signals against technical analysis tools like this can help us weed out the profitable from the unprofitable trades and increase our forex trading profits exponentially.
Of course, many traders will point out that it is fundamental factors, not technical factors, that drive the currency market. Events like a rise in interest rates or an announcement of a major power's Gross Domestic Product will cause an immediate effect and possibly also a longer term movement. So trends in currency price movements always have fundamental factors at the base.
Nevertheless, most of us are not in a position to make predictions of how the next major financial announcement will go and what will be its effect on the market. Forex traders working from home are not, for the most part, economic or financial analysts. So instead, we use technical analysis tools to show us in clear terms what has been happening in the market recently.
Identifying trends is a simple way to create a profitable forex trading system. All we have to do is see which way the price of a certain currency pair is moving and then buy or sell in order to profit from the movement. That assumes, of course, that the recent movement is a genuine trend that will continue. If it turns out to be just a fluctuation that quickly reverses, we will lose money. So how do we tell the difference?
One of the simplest ways is to draw trend lines on a candlestick chart. This means drawing lines through the highest highs and the lowest lows in a price movement that appears clear from the candlesticks. If the two lines are roughly parallel, this indicates a trend.
If they converge, coming together as if to meet at a point in the future, then this indicates that a breakout is likely, other things being equal. If they diverge, the market is probably too unpredictable for most trend traders to want to get involved.
Once a trading signal has been established in this way, we need to cross check the signal. For this purpose we can use the candlestick chart for a different time period. The normal practice here is to use a longer time period for the cross check, for example one hour if the first lines were drawn on a 15 minute chart, or a full day if the lines were drawn on an hourly chart.
We can also use indicators such as the MACD crossover. These are easily consulted in most broker software systems. Checking signals against technical analysis tools like this can help us weed out the profitable from the unprofitable trades and increase our forex trading profits exponentially.
Sunday, February 28, 2010
Forex Signal Services : Making Trading Easy
Signing up with a good forex signal service can make successful forex trading very easy. You will be told when to trade based on somebody else's system that has proved profitable for them. This can cut out a lot of work for you. You do not have to spend months and years analyzing the currency market and developing your own system.
Often times, the forex signal service will send you advice on stop losses and profit aims, and even the size of your position. In this situation all you need to do is follow the instructions and provided the service is a good one, you should make money. In fact, it is a lot like using a forex robot except that you are in full control all of the time.
However, it is important to understand what you are getting when you sign up for forex signals. You should check ahead of time about the likely risk and success rate of their system. All currency trading systems have losses from time to time and it is important that you understand what these are likely to be. That way, you can work out your risk and the amount of backup funds that you will need to support your trading style.
Another thing to consider when you sign up with a signal service is whether you actually will be able to place the trades. There are two questions here.
The first is practical. Do you have access to a computer and internet connection often enough that you can place a trade whenever you receive the alert? If you are relying on an iPhone or similar technology, can you actually access all of the services of your broker's trading platform that way? Have you tried placing a trade, setting a stop loss etc? It is easy to assume that anything that accesses the internet will allow us to trade, but that is not always the case.
The second question is psychological. Sometimes we may receive an alert and find that it suggests risking more than we normally would, or follows right on the heels of another trade that made a loss. Would you be able to stick with the system and go ahead? Or say a signal arrives at a time when you are already under stress for some reason completely unrelated to your trading, such as a family problem. Would you be able to go ahead and trade calmly?
If the answer to these questions is no, then you may not be in a position to make the best use of a forex signal service. Discipline is one of the most important attributes of a forex trader and it is important to cultivate that before you commit to something like forex signals.
However, if you are already trading and have faced up to these questions already, but you are having trouble finding a profitable system to operate, then a forex signal service might be the ideal way to make money as easily as possible.
Often times, the forex signal service will send you advice on stop losses and profit aims, and even the size of your position. In this situation all you need to do is follow the instructions and provided the service is a good one, you should make money. In fact, it is a lot like using a forex robot except that you are in full control all of the time.
However, it is important to understand what you are getting when you sign up for forex signals. You should check ahead of time about the likely risk and success rate of their system. All currency trading systems have losses from time to time and it is important that you understand what these are likely to be. That way, you can work out your risk and the amount of backup funds that you will need to support your trading style.
Another thing to consider when you sign up with a signal service is whether you actually will be able to place the trades. There are two questions here.
The first is practical. Do you have access to a computer and internet connection often enough that you can place a trade whenever you receive the alert? If you are relying on an iPhone or similar technology, can you actually access all of the services of your broker's trading platform that way? Have you tried placing a trade, setting a stop loss etc? It is easy to assume that anything that accesses the internet will allow us to trade, but that is not always the case.
The second question is psychological. Sometimes we may receive an alert and find that it suggests risking more than we normally would, or follows right on the heels of another trade that made a loss. Would you be able to stick with the system and go ahead? Or say a signal arrives at a time when you are already under stress for some reason completely unrelated to your trading, such as a family problem. Would you be able to go ahead and trade calmly?
If the answer to these questions is no, then you may not be in a position to make the best use of a forex signal service. Discipline is one of the most important attributes of a forex trader and it is important to cultivate that before you commit to something like forex signals.
However, if you are already trading and have faced up to these questions already, but you are having trouble finding a profitable system to operate, then a forex signal service might be the ideal way to make money as easily as possible.
Thursday, February 25, 2010
Successful Currency Trading Strategies
Anybody who wants to be successful with forex trading needs to be very clear about their currency trading strategies. And when I say 'successful' here, I don't only mean people who make lots of money but anybody who makes any kind of profit overall, because provided the system and strategies are sound, a small profit can always be scaled up.
A forex trader's strategies should be written down in the form of a plan. It is not sufficient to carry them around in your head because it is too easy to change the rules any time you feel like it. They need to be written down and placed on the desk in front of you and reviewed constantly.
The currency trading strategies that need to be written into this plan include all aspects of the forex system that is used. This includes the signal(s) to open a trade, the position size, the stop loss and the profit target when you will close a successful trade. Depending on your system, these may be the same for every trade or they may vary according to the signal. If they vary, be sure to write down exactly what is different and under what conditions.
In addition, it is important to have goals for your forex trading. Here I'm not talking about profit targets in monetary terms. Most beginners and some experienced traders do set themselves a monetary target such as $x in 3 months, doubling their funds every 6 months, or whatever, but these targets are not true goals and often, they are counterproductive.
Yes, we hear a lot about the importance of goal setting but having that type of financial goal over a certain time can actually harm your trading. It can have the opposite effect and make you lose money. The reason being the time pressure. This adds more stress to forex trading which, less face it, is high enough already.
Imagine a situation where you have set a target of doubling your money every 6 months. Say 5 months has passed and you are not close to that goal. You have made profits, but you have only half of your target. You are clearly not going to reach your goal unless you start taking huge risks - risks that might wipe out all the profits you have made so far and perhaps deplete all of your funds.
In forex trading, it is important to accept that any profit is good profit, and not set yourself up for failure by specifying that you have to make a certain amount in a certain time. Instead, set goals that are broad. For example, set a goal that you want to master the use of a certain indicator within the next 2 months, or read and test the system described in a certain book or ebook. When you set this type of goal, your currency trading strategies are much more likely to lead you to success. Small steps to achieve big gains!
A forex trader's strategies should be written down in the form of a plan. It is not sufficient to carry them around in your head because it is too easy to change the rules any time you feel like it. They need to be written down and placed on the desk in front of you and reviewed constantly.
The currency trading strategies that need to be written into this plan include all aspects of the forex system that is used. This includes the signal(s) to open a trade, the position size, the stop loss and the profit target when you will close a successful trade. Depending on your system, these may be the same for every trade or they may vary according to the signal. If they vary, be sure to write down exactly what is different and under what conditions.
In addition, it is important to have goals for your forex trading. Here I'm not talking about profit targets in monetary terms. Most beginners and some experienced traders do set themselves a monetary target such as $x in 3 months, doubling their funds every 6 months, or whatever, but these targets are not true goals and often, they are counterproductive.
Yes, we hear a lot about the importance of goal setting but having that type of financial goal over a certain time can actually harm your trading. It can have the opposite effect and make you lose money. The reason being the time pressure. This adds more stress to forex trading which, less face it, is high enough already.
Imagine a situation where you have set a target of doubling your money every 6 months. Say 5 months has passed and you are not close to that goal. You have made profits, but you have only half of your target. You are clearly not going to reach your goal unless you start taking huge risks - risks that might wipe out all the profits you have made so far and perhaps deplete all of your funds.
In forex trading, it is important to accept that any profit is good profit, and not set yourself up for failure by specifying that you have to make a certain amount in a certain time. Instead, set goals that are broad. For example, set a goal that you want to master the use of a certain indicator within the next 2 months, or read and test the system described in a certain book or ebook. When you set this type of goal, your currency trading strategies are much more likely to lead you to success. Small steps to achieve big gains!
Tuesday, February 23, 2010
Scalper Expert Advisor : Caution!
Using a scalper expert advisor can be a very profitable way to trade the currency markets but it also carries a good deal of risk. Some people seem to make a lot of money this way while others lose their shirts. So what makes the difference and how can you stack the odds in your favour when you are using a scalper expert advisor?
1. Choose your broker carefully
It is important to get the right broker when you are using a scalper expert advisor. Many brokers do not like scalping strategies and particularly object to the fast profits that can be made with an EA.
Normally these brokers will be market makers who will carry the risk of a trade themselves until they can match it in the ECN. If the EA moves in and out of the market very fast, they do not have a chance to cover their risk, and so you profit will be their loss. As you can imagine, if you are very successful they will soon decide that they do not want your business.
Brokers who have a place in the ECN and do not have to rely on a third party are more likely to be happy to accept your robot's scalping strategies. To find an amenable broker either ask the developers of your EA or look for recommendations from other scalping traders in forex forums.
2. Manage your risk
Many people new to forex trading assume that because scalping strategies rely on many small trades, they are less risky than systems relying on a higher profit per trade. This is not true at all. Scalping is just as risky as any other form of forex trading. Risk management is essential if you do not want to be wiped out of the game.
For the same reason it is important not to overstretch in terms of leverage. Certainly, do not choose a broker by looking for the one that gives you the highest leverage, unless you are very sure of the drawdown of your system and that you can cover it.
The problem with a high leverage means that triggering a stop loss will mean a greater loss. Sure, the profits are higher too, but when you go through a bad patch you can run through your funds very quickly. It is important that your account can take the battering. It is much more likely to be able to do that if you have kept your risk and your leverage low.
3. Understand your EA
It is also important to understand what your scalper expert advisor is doing. This means having realistic expectations about things like the number of times it will trade in a week, how much on average it will make on a successful trade, how much it will lose on an unsuccessful trade, what percentage of trades are successful, etc.
All of this helps you to know what you can expect in terms of your bottom line in the long term and what will be the optimum level of risk. When it comes to risk, by the way, always assume that the worst case scenario is at least twice as bad as the worst patch that you have seen.
You cannot rely on information from the developers or from other users in this respect. This is not a matter of trust, it is just that different variables will apply to each individual. So do your own back testing and demo testing before you start to use a scalper expert advisor live.
1. Choose your broker carefully
It is important to get the right broker when you are using a scalper expert advisor. Many brokers do not like scalping strategies and particularly object to the fast profits that can be made with an EA.
Normally these brokers will be market makers who will carry the risk of a trade themselves until they can match it in the ECN. If the EA moves in and out of the market very fast, they do not have a chance to cover their risk, and so you profit will be their loss. As you can imagine, if you are very successful they will soon decide that they do not want your business.
Brokers who have a place in the ECN and do not have to rely on a third party are more likely to be happy to accept your robot's scalping strategies. To find an amenable broker either ask the developers of your EA or look for recommendations from other scalping traders in forex forums.
2. Manage your risk
Many people new to forex trading assume that because scalping strategies rely on many small trades, they are less risky than systems relying on a higher profit per trade. This is not true at all. Scalping is just as risky as any other form of forex trading. Risk management is essential if you do not want to be wiped out of the game.
For the same reason it is important not to overstretch in terms of leverage. Certainly, do not choose a broker by looking for the one that gives you the highest leverage, unless you are very sure of the drawdown of your system and that you can cover it.
The problem with a high leverage means that triggering a stop loss will mean a greater loss. Sure, the profits are higher too, but when you go through a bad patch you can run through your funds very quickly. It is important that your account can take the battering. It is much more likely to be able to do that if you have kept your risk and your leverage low.
3. Understand your EA
It is also important to understand what your scalper expert advisor is doing. This means having realistic expectations about things like the number of times it will trade in a week, how much on average it will make on a successful trade, how much it will lose on an unsuccessful trade, what percentage of trades are successful, etc.
All of this helps you to know what you can expect in terms of your bottom line in the long term and what will be the optimum level of risk. When it comes to risk, by the way, always assume that the worst case scenario is at least twice as bad as the worst patch that you have seen.
You cannot rely on information from the developers or from other users in this respect. This is not a matter of trust, it is just that different variables will apply to each individual. So do your own back testing and demo testing before you start to use a scalper expert advisor live.
Monday, February 22, 2010
Profitable Candlestick Trading
Profitable candlestick trading is a great way to make money from forex trading. It follows the 'keep it simple' rule which many traders consider to be the first golden rule of currency trading. You do not have to understand a lot of maths or do any complicated analysis.
Simple candlestick trading is often known as price action trading. This type of analysis relies only upon the price chart itself for trading signals. It does not involve use of any indicators based on moving averages such as MACD or stochastic indicator.
Many forex trading systems are built around these indicators and they may be successful in many cases, but the fact remains that they are lagging indicators. This means that they describe what was happening in the market in the past, not now. Profitable candlestick trading is based upon looking at the most recent markers possible.
For this method, bar charts can be used, since they give the same information as candlesticks. However, most traders find the visual clarity of the candles makes it much simpler to look at the candlestick chart. In some cases you may draw trend lines or support and resistance lines, but sometimes a trading signal may be taken from just one or two candles.
A simple system may be based around following either a bullish market (rising price) or bearish market (falling price). In a bullish market you would open a trade to buy the currency pair, and in a bearish market you would open a trade to sell it. We will take the bullish market as an example.
In a bullish market you would expect to see a white (unfilled) candle. If your system uses green/red or blue/red candles, the candle would be either green or blue respectively. This means that the close price was higher than the opening price. In addition, you would expect the close price to be fairly close to the high: that is, within around the top third of the full range from the low to the high. In visual terms, this will mean that the candle has a short upper wick. In some cases of course there may be no wick at all.
That situation suggests that the next period will see a test or an improvement on that closing price. So while the next period may not close higher, the high of the next period is likely to be above that closing price, other things being equal. This is how a trading signal can be taken from just one candle.
Often however, a trader would check the signal before going ahead and opening a trade. You could do this by looking at a longer period or by requiring that the previous candle also reflected an upward price movement.
As you can see, this is a simple system that is very quick to apply. Speed can be important in short term trading where a few seconds spent checking lagging indicators could mean that you miss out on the profit potential.
If you want to put this system into practice, keep in mind that it is always best to practice your skills in a demo account before going live. A bullish candle does not guarantee that the price will go higher and there is always a possibility of loss in currency trading. So be sure that you know what you are doing and are comfortable with the system before using real money. That way you can reduce your risk with profitable candlestick trading.
Simple candlestick trading is often known as price action trading. This type of analysis relies only upon the price chart itself for trading signals. It does not involve use of any indicators based on moving averages such as MACD or stochastic indicator.
Many forex trading systems are built around these indicators and they may be successful in many cases, but the fact remains that they are lagging indicators. This means that they describe what was happening in the market in the past, not now. Profitable candlestick trading is based upon looking at the most recent markers possible.
For this method, bar charts can be used, since they give the same information as candlesticks. However, most traders find the visual clarity of the candles makes it much simpler to look at the candlestick chart. In some cases you may draw trend lines or support and resistance lines, but sometimes a trading signal may be taken from just one or two candles.
A simple system may be based around following either a bullish market (rising price) or bearish market (falling price). In a bullish market you would open a trade to buy the currency pair, and in a bearish market you would open a trade to sell it. We will take the bullish market as an example.
In a bullish market you would expect to see a white (unfilled) candle. If your system uses green/red or blue/red candles, the candle would be either green or blue respectively. This means that the close price was higher than the opening price. In addition, you would expect the close price to be fairly close to the high: that is, within around the top third of the full range from the low to the high. In visual terms, this will mean that the candle has a short upper wick. In some cases of course there may be no wick at all.
That situation suggests that the next period will see a test or an improvement on that closing price. So while the next period may not close higher, the high of the next period is likely to be above that closing price, other things being equal. This is how a trading signal can be taken from just one candle.
Often however, a trader would check the signal before going ahead and opening a trade. You could do this by looking at a longer period or by requiring that the previous candle also reflected an upward price movement.
As you can see, this is a simple system that is very quick to apply. Speed can be important in short term trading where a few seconds spent checking lagging indicators could mean that you miss out on the profit potential.
If you want to put this system into practice, keep in mind that it is always best to practice your skills in a demo account before going live. A bullish candle does not guarantee that the price will go higher and there is always a possibility of loss in currency trading. So be sure that you know what you are doing and are comfortable with the system before using real money. That way you can reduce your risk with profitable candlestick trading.
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