Let me to tell you about simple, but effective methods of an entrance in the market. They – one of the best though are simple and plain. These methods well show themselves, confirming efficiency in great majority of cases, when other techniques give in, submitting false signals or forcing us to doubt correctness of the decision. They are selected as a result of studying of methods of a correct entrance in the market. Described entry points equally well work in any markets: forex, futures, safety stocks. And it is not necessary to forget about stop-loss warrants.
Trade in a trend.
Trade in a trend often is represented as a simple thing. All of us know an old indisputable truth: “Trend is your friend”. But the entrance in an item not at the beginning of just an arising trend usually looks problematic and dangerous to the majority of investors. The reason is hidden in the psychological barrier arising at the majority of people from exchange community, which hardly revises the point of view at an existing trend.
At the begun rise in prices after descending movement, everybody waits for catastrophic falling, therefore with pleasure sells, and at any fall in an ascending trend, it seems to all that the prices will go above and consequently all are ready to purchase at each correction. For this reason the majority of investors enter into purchases almost at the top and sell almost in the market basis. In the middle of a trend often there is a tranquility of investors; they forget about care of safety of the profits, which they have got on trading accounts.
Purchases in rising and sales in a going down trend at the majority of traders do not coincide with a market rhythm. Pay attention, we do not consider cases, when trade forms at the moment of trend origin. Now we speak about how it is necessary to behave in a trend. And for this situation the best methods of an entrance in the market are based on use of trend lines with application of support or the resistance, advanced by means of the last complete movements. So, here are two best points, allowing enter into trade with high probability of success at rather small share of risk in a market trend. In each of them is supposed application of limit warrants, and only occasionally – market, if for this purpose there are strong reasons.
Purchase from a line of an ascending trend at the third contact.
The ascending trend is advanced, when the prices rise. We have a possibility to conduct a line with an inclination upwards. It is conducted on two consistently increased bases of the price bars having an absolute bottom rather at least of two previous and two subsequent bars. The best moment for an entrance in the market arises at the third contact of the price trend lines. In this point, unconditionally, it is necessary to purchase – and only to purchase.
Using such technique, it is necessary to find out beforehand price levels, which can be various – depending on during what moment there will be a contact of the prices with a trend. The best variant – to use day schedules where for each day there will be a price level. More exact adjustment can be conducted, using hour or 30-minute schedules. But thus it is necessary to consider real possibilities of the software as bad quality of software can deform the forecast very much, give wrong price levels for an entrance.
It is important to gather as much information about forex as possible. Because this knowledge will help you not to lose much money on Forex trading or Forex investment.
Surely not a single piece of knowledge can be a 100% guarantee against losses, especially on forex market, but sometimes even one Forex books can save you much money.