The best forex traders improve their skills through discipline and practice. They also conduct self-analysis to learn what motivates their trades and how they should keep fear and greed out of their decision-making. Knowing what to look for in trading signals is also an important aspect of forex trading. Here are things you should be aware of when looking at forex trading signals.
Decide on Your Entry and Exit Points
Many traders are confused by conflicting data from charts in different timeframes. For example, a buying opportunity could show up on a weekly chart, with an intraday chart showing a sell signal.
If you’re using a weekly chart for basic direction and a daily chart to time your entry, you’ll need to synchronize them. So, if you’re getting a buy signal from the weekly chart, what until you get a buy signal confirmed by the daily chart. Your timing should be in sync.
Conduct a Weekend Analysis
With the markets closed at the weekend, study the weekly charts and look for any news or patterns that may influence your trade. A pattern might be making a double top, for example, with the news and pundits suggesting a market reversal. This is reflexivity, where the pattern might prompt the pundits, who, in turn, reinforce that pattern. When you’re being objective, you’ll be in a position to make smart plans. Wait for your setups and practice patience.
Keep a Printed Record
By keeping a printed record, you have a very useful learning tool at your disposal. Print out your chart and list out all the reasons for a particular trade, including any fundamentals that influence your decisions. Mark the entry and exit points on your chart. And add relevant comments, including any emotionally-driven reasons for taking action. Were you experiencing anxiety? Were you getting too greedy? Did you start panicking? When you objectify trades, you’ll develop the discipline and mental control to execute in line with your system, as opposed to your emotions or habits.
Bonus Tip: Choosing Your Broker and Trading Platform
Don’t underestimate the importance of choosing a reputable broker. You should spend some time researching what separates one broker from the other. You should know each broker’s policies and the approach they each use to making a market. Trading in the exchange-driven markets is different from trading in the over-the-counter market, for example.
You should also make sure that your broker’s trading platform is appropriate for the kind of analysis you intend to do. If you’re a fan of Fibonacci numbers, for example, check that you can use the platform to draw Fibonacci lines. A strong broker with a weak platform, or vice versa, can be problematic. So make sure to get the best of both worlds.
The above steps provide a structured trading approach and should assist you in becoming a better trader. Trading is an art form, and the one way to make continual improvement is through disciplined and consistent practice.
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