To increase the profitability of your fx trading, increase the amount of knowledge you have about advanced charting techniques. Inside your fx trading platform should be a veritable cornucopia of chart trading indicators and arrays that you can use to delineate trends, spot entry and exit points and help you decide when volatility levels are relative low or high. Each currency pair seems to respond a little bit differently to such indicators and arrays. For instance, if you’re fx trading the USD/JPY, using an “Ichimoku cloud” (to figure out underlying trends, support and resistance levels plus entry/exit points) is a superior analytical tool. The EUR/USD, on the other hand, appears to lend itself well to being dissected, for fx trading points, with a “Fibonacci retracement” array.
If you’re an fx beginner, find a long-term trend and go with the flow. Use the crossover points of a pair of 50-day and a 200-day moving average lines to indicate when you should enter and exit an fx trade. This kind of strategy should be very cost effective.
Achieving Better FX Positions
Almost all expert fx traders measure themselves by their average percentage profitability per trade against their average percentage loss per trade. As a result, they are always trying to figure out ways to boost their profitability while keep their losses as low as possible. The upshot is that they tend to go for long-term, trending fx trades where their trade execution costs are relatively low (in comparison to the profit made), building up a position – contract by contract – based on an increasing profit in their margin accounts. Some will use very low leverage ratios; others will increase the amount of leverage used at the trade moves forward. If you’re a beginner, there’s no reason why shouldn’t trade in this manner also.
Tools Available To Improve FX Positions
The best set of tools that you will ever need to increase your profitability probably already exists in the charting section of your fx trading platform. (If it doesn’t, don’t worry; you can acquire excellent advanced charting software packages on the internet.) Indicators like exponential, smoothed or simple moving averages or “MACD” (“Moving Average Convergence-Divergence”) can help you see trends very clearly. “ATR” (“Average True Range”) can inform you of how volatile any currency pair is acting (a good thing to know if you are trying to get into an fx trade during a relatively “less volatile” time zone). Lastly, Bollinger Bands show you when pricing is getting out of whack (which is great for figuring out when to fade a move).
Using Tools To Boost FX Trading Returns
If you are a beginner, pick a long-term (i. e., more than 1 month long) trend to trade. Choose a currency pair that has good, global trading volume (e. g., EUR/USD, GBP/USD, USD/CHF or USD/JPY). Put the pair’s chart on “daily”. Now, add two “simple” moving average lines – i. e., a 50-day and a 200-day. Notice when the 50-day line moves up and over the 200-day line. That’s called a “golden cross” (and represents a strong signal to go long). Alternatively, if the 50-day line goes down through the 200-day line (and stays under it), then you have a “death cross”. Sell! Such a strategy does not produce too many fx trade signals; your execution costs should be relatively low.