Technical analysis is one of the most important parts of the trading business. Without having the ability to analyze the technical data, it’s tough to find the best signals. It allows investors to find the potential buying and selling zone. Many traders in Hong Kong often think learning to analyze the technical variable is an easier task in the Forex market. But in reality, technical analysis is the most complicated task which requires pin perfect calculation. A slight mistake in your calculation might cost you a huge amount of money.
Elite traders always focus on the important variables when analyzing the technical data. In today’s article, we are going to highlight 4 important technical factors that every trader should know.
Table of Contents
Price action trading strategy
The price action trading strategy is widely used by skilled traders. This system is based on the Japanese candlestick which tells you a lot about the price movement. For instance, the opening and closing price of the candle determines the strength of the buyers and the sellers. The advanced traders use the wick of the candle to find the rejection of a certain level. Things are not only limited to the execution of trades, but the trades can also use the candlestick pattern to set a tight stop loss. When you learn to use a tight stop loss, things become easy and you easily execute quality trades without having any big issues. Once you truly understand the formation of the Japanese candlestick patterns, you can easily secure quality trades.
Trading the major chart patterns
The majority of retail traders execute trades in their Forex trading account based on the support and resistance level. They forget the importance of chart pattern trading strategy. Using a chart pattern trading strategy is by far the most effective way to earn money and it gives the trade’s unique ability to ride big price movement. There are two basic types of chart patterns used by professionals. The first one is the trend continuation pattern trading strategy which is recommended for rookie traders. The second one of the reversal pattern trading strategy, which is mostly used by the advanced traders. Learn more about these two types of chart pattern trading strategies so that you can make a big profit without even analyzing the major news.
Trading the major reversal
Every new trader thinks trading the reversal is a very big mistake. But those who have good knowledge of technical analysis can make big gains by trading the reversal. Trading the major reversal is not a big task. The use of the simple trend line tools can greatly help you trade the major reversal. However, you must analyze the data in the daily time frame or else you will be trading the major retracement. If possible use the news factors to reinforce your technical idea. But never think you can’t make a profit by taking bets against the major trend. The market often changes the trend and smart traders always try to utilize each profit-making opportunity.
Stop trading small period
If you trade the smaller time frame, you will lose most of the trades. The professional traders are doing relatively well in the trading industry since they know the perfect way to assess the risk factors. Think like the elite traders in Hong Kong. They always analyze the higher time frame when it comes to technical analysis. They never rely on the lower period since they know it increases the risk factors and forces them to lose more trades. Trading should be done in a relaxed way, only then will you be able to develop yourself as a fulltime trader. Ignore the trade setups in the lower period so that you can easily understand how the price moves in the long run. Try to trade the major asset when you rely only on the technical parameter.