Powerful Technical Skills to Improve the Trading Performance

Powerful Technical Skills to Improve the Trading Performance

 

Technical analysis can be essential when entering a trading world like Forex. Forex is the largest online currency exchange platform where one can take part in buying a financial instrument and selling it after retaining for a specific period. This duration differs depending on the timeframes chosen by investors.

In the currency exchange industry, one may either choose a shorter timeframe or longer timeframe. A shorter timeframe means that the investor has to hold the currency for a shorter duration, which ranges between a few seconds, minutes, or even a few hours, but never exceeds a day. On the other hand, in a longer timeframe, the trader has to hold the currency for a longer period, which may range from a few days, weeks, or even a couple of months. Position trading, swing trading, news trading, etc., fall under this category of a longer timeframe.

When you are thinking about using technical indicators or want to be a technical analyst, then it is recommended that you choose the timeframe and a trading style at the beginning. Here, we will disclose a few fundamental things about technical analysis.

Few basic terminologies in the Forex industry

To be a technical analyst in Forex, an investor must learn about the following terminologies –

  • Volume or trading size

Volume or trading size is also known as the lot or position size. The size indicates the risk you are willing to take during a trade. Beginners increase their risk by choosing a greater lot size.  Learn more about lot size scaling by using free resources or visit the site of Saxo and access their learning center to clear up any confusion.

  • Candlestick pattern

This is a popular pattern in the chart, and this candlestick design is considered one of the best methods to enter a business. In this design, a newbie will notice several candles, and each of those candles has three different elements – a body, a nose, and a tail. Based on the colors of the candles and the size of the nose or tail, one can easily realize the market condition. For example, the journey of black or red-colored candles indicates a bearish direction, and the journey of white or green colored candles suggests a bullish flow.

  • Market pattern and resistance and support level

One may see three different types of design in the graph – i) an uptrend (when the currency’s value increases), ii) a downtrend (when the price falls), iii) a consolidated condition (when there is no sharp rise or fall in the price). The resistance level is the point is the peak value of the uptrend, and the support level is the lowest level of a downtrend.

Popular Forex technical strategies

 

  • Head and shoulder FX strategy

 

The “head and shoulder” pattern is considered one of the most effective strategies in the CFD industry. This design forms when there are three triangular shapes with three different peak values. The middle triangle will reach the highest value compared to the other two. In comparison, the other two will reach a similar peak value. The middle section is called the head, and those two are called the shoulders.

 

  • Divergence

 

Momentum divergence is one of the leading indicators in the CFD industry and is widely used by professionals. Some of them claim that this indicator can significantly increase profits. Divergence occurs when the indicator provides the opposite signal of the market. There are four basic categories of divergence – regular bullish, regular bearish, hidden bullish, and hidden bearish.

 

  • Triangles or wedges

 

Triangles and wedges are two essential chart patterns, and one can draw the triangles and wedges in the graph to determine the possible movement in the industry. To have a better view, experts recommend drawing a wedge or triangle.

These are the three important FX technical strategies. A trader in the Mena region can use their demo account to practice more with these strategies to become an expert.

 

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