Chart pattern trading is one of the easiest ways to catch the large market movements. The new traders often say that they can’t ride the long-term market trend. They just see the professional traders securing big profits from a single trade. To be honest, catching the large market movement is not so hard. If you can master chart pattern trading system it won’t take long to secure big profits from the market. So how do we learn to chart pattern trading? There are some basic steps which you need to follow to become a professional chart pattern trader. For instance, if you don’t know how to draw the perfect support and resistance level it will be a tough task for you to trade the key levels in the market. Let’s find out how the professional traders use the chart pattern to catch big market movements.
Use of the daily time frame
When you use the chart pattern, you have to make sure that you are using the daily time frame. Some expert traders often use the weekly and monthly time frame. You have to understand the fact that chart pattern traders are always long-term traders. They are not day traders or scalpers. When you consider long-term trading strategy you have to deal with lots of trading parameters. Most of the time the novice traders uses the technical analysis in the lower time frame. But in lower time frame trading you will always have to deal with the false spike. But if you start trading the higher time frame you don’t have to worry about the false spike. It’s true that higher time frame trading is extremely boring but you are killing the risk factors to a great extent.
Trade the continuation pattern
Majority of the retail traders are losing money in Forex trading industry due to reversal trading. For this very reason, the expert traders always suggest the new traders trade the continuation chart pattern. To do this you have to identify the long-term prevailing trend. Use the daily or weekly time frame to do the market analysis. Once you have successfully identified the market trend it’s time for you to look for potential chart pattern. There are many different ways of trading the continuation chart pattern. However, if you use the price action signal, you will see a great deal of improvement in your trade execution. To be precise you need to learn price action trading to trade continuation pattern successfully. At times you will face losing trades due to the change of trend but this is very normal. Consider this as your business cost and wait for the next trade setup. Never take too much risk even though you have the best trading signals. Follow proper risk management to save your trading capital.
Importance of fundamental factors
Fundamental analysis plays a great role in currency trading profession. You can’t make a consistent profit unless you understand the fundamental factors of the market. For instance, if the FED hike their interest all of a sudden, you will see a strong surge in the U.S dollar index. Such high impact news can change the long-term prevailing trend of the market. Understanding the fundamental factors is not all hard. You can easily learn fundamental factors by using the demo trading account. The retail traders often think that fundamental factors are not important for currency trading. But this is not all true. In the eyes of the trained professional fundamental factors are often considered as the most powerful price driving catalyst.
If you can follow these rules, you can easily change your trading career. Chart pattern trading is not all complex. Just follow the basic rules of investment and you won’t have to lose money. Focus on the best quality trades and protect your trading capital at any cost.