Many forex traders are looking for a powerful strategy that can lead them to financial freedom instantly. In fact, learning forex from stage to stage is something that absolutely must be done. Even experienced traders still have to keep learning so they can always adapt to changing market conditions. A strategy that works well today can suddenly result in massive losses next week, so adjustments always need to be made.
However, there are three basic forex trading techniques that are almost always constant. These three basic forex trading techniques need to be remembered and must be mastered by every trader.
1. "Trade with the Trends"
For forex traders, trends are the closest friends that if we try to fight them, they can be dangerous. There are indeed "against the trend" forex trading techniques, but in general, in trading, it will be easier to harvest profits if "trade with the trend".
Roughly speaking, this means, if there is an uptrend (uptrend), then traders should only open "buy" positions. On the other hand, during a downtrend, you should only open short positions.
However, if you are more careful, you also need to know how to trade in the middle of three trends in forex: bullish (when the price of a pair goes up), bearish (when the price of a pair goes down), and sideways/ranging (when the price moves up and down within the range). narrow). Every trader needs to know what a "trend" is and how to detect the start and end of a trend. This understanding is very important because it relates to how we will trade a pair later.
2. "Buy at Support"
Literally, this means that a trader is recommended to open a "buy" position on a pair when the price is at its lowest level (support level). With the expectation that after reaching the lowest level then the price will reverse up, so here traders must study the theory of support-resistance well.
One of the most recommended forex trading techniques is to buy when the bullish price is correcting. How to know if the price will shoot up again or continue to reverse down? For this, it is necessary to learn and practice various techniques to identify support-resistance.
3. "Sell at Resistance"
Contrary to point number two, a "sell" position should be opened when the price is at its peak (resistance level), where the price will reverse from rising to falling. Here too, it is a good move to "sell" when the bearish trend is correcting.
For example, the GBP/USD forex pair is falling. For a while, the price will continue to decline, but later there will be a moment where the price seems to be turning up. This kind of "correction" is sought after by many traders, because if the situation is right, the price will not continue to rise, but will resume its initial trend, which is bearish.
Sounds easy right? Indeed, many forex trading techniques sound easy to read, but are difficult to apply. One tip that almost all trading masters give is that all trading techniques should be tested on a demo account first. In a demo account, before investing in old-age savings for forex trading, we can practice with virtual money. Oftentimes, to apply these 3 simple forex trading techniques, it is also necessary to learn a number of supporting technical indicators.