Trading with the major trend is one of the most effective ways to make money online. Being a new trader in the trading industry you might get biased towards EAs and bots but this will never help you to earn money. Some of you might buy an expensive trading system from the experienced trader but still, you lose money. You have to think like professional traders in Hong Kong. Trading is not all complex. The new traders always find a way to make things overly complicated and lose a big portion of their investment. Today we are going to give you clear guidelines about the use of Fibonacci retracement tools. Once you read this article, you can easily execute high-quality trades in favor of the market trend.
Key retracement levels
The new traders are always trading the market without having any precise goal. This is one of the key reasons why they are losing money regularly. Start trading the 38.2%, 50% and 61.8% retracement levels. These are the most prominent Fibonacci retracement levels. Most of the time the market starts to move in favor of the trend after hitting level. Some you might execute pending trades at this level but this is not the proper way to reduce the risk exposure. Once the price of a certain asset hits a critical retracement level, you need to look for a price action confirmation signal. If you execute the trade with the price action confirmation signal you can easily make a profit and make a decent living out of trading.
Use the retracement tools in the daily time frame
As a Fibonacci trader, you have the freedom to use the tools in any time frame. But the pro trader always prefers to trade it in the higher time frame. They use a premium broker like Saxo so that they can analyze the price movement in a robust trading platform. Visit https://www.home.saxo/en-hk to learn more about the professional environment offered to the retail traders. Draw the key retracement level in the daily time frame and you will be able to make a huge profit in this market. If you use it in the 4-hour time frame, it won’t take much time to lose a big sum of money. Always remember, nothing is absolute in this market. In place of uncertainty, if you trade the lower time frame, you are bound to lose trades. Regardless of the condition of the market, use the Fibonacci retracement tools in the daily time frame.
Managing the risk exposure
Once you learn to trade the major retracement level, you will be surprised to see the success rate. This is where most of the traders make a mistake. They start increasing the risk factors and bum up their profit factors. Things go fine for a few months but all of a sudden they lose a big sum of money. Nothing is certain in the investment business. Even the best trading system in the world might have more than 10 losing trades. So, never trade the market with high risk since it will ruin your trading career. Try to trade the market with a 1% risk since it will help you trade the market without any stress. Stop being an aggressive trader. The aggressive traders indeed make more money but considering the long term outcome, they are most likely to blow up their trading accounts.
Learning the use of Fibonacci retracement tools is very easy. You have access to a free demo account. Switch to the virtual trading environment and try to fine-tune your Fibonacci trading system. After demo trading the market, start to trade the market with a broker like Saxo. Never forget the role of risk management. Stop taking the unnecessary risk even though you have a high chance to win the trade. Focus on simple logic and trade the market with discipline.