Drawing Correct Trendlines
Learning currency trading is like building a new car from scratch without an instruction manual for new traders. Many of them acquire quality parts like brakes, wheels, motors, seats, steering wheels etc to build the car.
You need right parts with right instructions to put them together in order to become a successful trader. After all, your car can come to a screeching halt due to a part such as a $2.00 gasket.
Currency trading is very different from trading stocks. Companies can file for bankruptcies like Enron or go completely out of business taking their share value to zero. But in case of currencies there is no threat of a country going bankrupt.
What can happen is that severe economic changes take place between countries. This can create dramatic changes between the currencies value of different countries. When that happens, it can create an incredible financial return for savvy, educated currency traders.
Before you enter the markets, you should learn how to find the current trend. For a skilled and educated trader, learning how to spot a trend is very important. A trend can last from a few hours, several days or several months. It can create an enormous financial return for the savvy.
You should always trade in the direction of the market. Fighting a trend is like swimming against the current. Traders can make many mistakes. The biggest mistake is trading in the wrong direction.
If you are an active trader and you dont have the trading software that has the moving trend line indicator, you will need to learn the skill of drawing correct Trendlines. An incorrectly drawn trendline can mean the difference between making and losing money in a trade.
There are three types of trend lines that you need to learn how to draw. 1) An Inner Trendline. 2) An Outer Trendline. 3) A Long Term Trendline. These three trendlines form on all time frames and in both uptrends and downtrends and you will need them in your trading.
In any uptrend draw a straight line connecting levels of support without penetrating bodies or wicks of a candle. Correctly drawn trendlines can project future levels of potential support in an uptrend and future levels of resistance in a downtrend.
Draw inner up trendlines by finding the last two support levels. Draw the line from left to right. Draw the outer up trendline by starting at the far left of the chart. Move to the right and connect the majority of the support levels with a straight line.
Draw the outer term trendline by going on a larger time frame and connect the levels of support starting from the far left of the chart moving forward. In a downtrend, the market reacts the same way as an uptrend but in an opposite direction. That means all the rules are the same but in the opposite direction. Instead of a support level, use the resistance level to draw trendlines in a downtrend. - 23212
You need right parts with right instructions to put them together in order to become a successful trader. After all, your car can come to a screeching halt due to a part such as a $2.00 gasket.
Currency trading is very different from trading stocks. Companies can file for bankruptcies like Enron or go completely out of business taking their share value to zero. But in case of currencies there is no threat of a country going bankrupt.
What can happen is that severe economic changes take place between countries. This can create dramatic changes between the currencies value of different countries. When that happens, it can create an incredible financial return for savvy, educated currency traders.
Before you enter the markets, you should learn how to find the current trend. For a skilled and educated trader, learning how to spot a trend is very important. A trend can last from a few hours, several days or several months. It can create an enormous financial return for the savvy.
You should always trade in the direction of the market. Fighting a trend is like swimming against the current. Traders can make many mistakes. The biggest mistake is trading in the wrong direction.
If you are an active trader and you dont have the trading software that has the moving trend line indicator, you will need to learn the skill of drawing correct Trendlines. An incorrectly drawn trendline can mean the difference between making and losing money in a trade.
There are three types of trend lines that you need to learn how to draw. 1) An Inner Trendline. 2) An Outer Trendline. 3) A Long Term Trendline. These three trendlines form on all time frames and in both uptrends and downtrends and you will need them in your trading.
In any uptrend draw a straight line connecting levels of support without penetrating bodies or wicks of a candle. Correctly drawn trendlines can project future levels of potential support in an uptrend and future levels of resistance in a downtrend.
Draw inner up trendlines by finding the last two support levels. Draw the line from left to right. Draw the outer up trendline by starting at the far left of the chart. Move to the right and connect the majority of the support levels with a straight line.
Draw the outer term trendline by going on a larger time frame and connect the levels of support starting from the far left of the chart moving forward. In a downtrend, the market reacts the same way as an uptrend but in an opposite direction. That means all the rules are the same but in the opposite direction. Instead of a support level, use the resistance level to draw trendlines in a downtrend. - 23212
About the Author:
Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading and swing trading stocks and currencies. Discover A Revolutionary New Forex Robot. Develop your own Forex Trading System.
posted by X - Men @ 4:14 AM
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