3 Basic Trading Techniques For Beginners That Must Be Understood
The basic techniques of forex trading can be done in many ways, but which is the best for beginner traders? The most appropriate answer is undoubtedly a simple strategy. If the technique is simple, will it be profitable later? Even though the masters always use complex strategies with sophisticated indicators? Believe it or not, many beginner traders are misguided by that perception. Masters can be consistent profit because they have experience implementing trading strategies correctly. In the hands of beginners, the masters' trading techniques certainly won't bring the same results.
The key to success in trading does not lie in how well the strategy is used. Useful or not trading techniques are relative, depending on the compatibility with the trader's style and how the trader uses it. Therefore, if you are a beginner, you should find a strategy that is easy to understand.
The most straightforward basic forex trading techniques to analyze price movements
Reading Trend
This forex trading technique for beginners is the basis of various strategies. So if you do not understand it, it is very likely that you will find it challenging to digest different ideas of forex trading strategies out there.Basically, reading price trends is very easy. If the price looks strong then he is in a bullish trend. Conversely, when prices appear to decline, it means that a bearish trend is being formed. But to look for opportunities from price trends, further, observation is needed, either by recognizing high low prices or using trend indicators as a tool.
In this case, a forex trading technique for beginners who can be relied upon is to read the trend with the trendline. The trendline can confirm the bullish trend when the line is below the price and is not broken by a pullback (temporary decline). If you use forex trading techniques for beginners who follow the trend (trend following), then look for buy opportunities from rebound prices after a pullback. The opposite applies to bearish trend conditions.
In addition to trend following, the basic techniques of forex trading for beginners with a trendline can also be used in a trend reversal strategy. Trading opportunities, in this case, arise when pullback prices break the trend line that has been tested and show strong reversal signs. Indications for reversals can be obtained from confirmation of price action (closing costs outside the trendline) or the influence of fundamental issues.
Recognizing Support Resistance
Support resistance is essential levels that are universally used by all traders. Although the methods and indicators used to distinguish them very, support resistance is almost always present in the trader's analysis tool.Forex trading techniques for beginners related to this can be done by identifying market conditions, then drawing lines of support resistance based on price patterns. If it is in a trending condition, support can be obtained through the withdrawal of the trendline, which is below the price. To get resistance, pull the second trendline above the price.
While if prices tend to move flat, the recommended forex trading technique for beginners is to connect low points as support, and high scores as resistance. The way to read the opportunities of this strategy is that prices will comply with the limits of support resistance as long as there are no significant changes that can shake price movements. So when the price drops to the support limit, the next move indicates that prices bounce up, and vice versa when price increases touch resistance.
But there are times when the price breaks the support or resistance, and there is an active breakout. In this case, the broken support will be a new resistance, while the fractured opposition will be further support. It is best to be careful when trading when the news release is significant because fundamental muscular issues are usually the mastermind behind the price breakout of resistance support.
Identify Price Action
Price action is a price pattern reflected in the chart. Those who are accustomed to relying on price action don't even need to use indicators to read price movements. But if you are a beginner, you should use price action as a signal indicator confirmation.The principle of basic trading techniques with price action is natural. Tall candlesticks show market certainty, while small candlesticks with long axes reflect market uncertainty. Many traders use a small long-axis candle as a reversal confirmation if it is formed at a support or resistance level. Meanwhile, large candles are often used to confirm the strengthening of the price trend in a specific direction.
There are lots of candle patterns with various forms and indications. But for the understanding of new traders, recognizing forex trading techniques for beginners with the basic ideas above can already be an introduction which in the future can be developed by learning other candlestick patterns.