Understanding the support and resistance levels in the Forex market
Everyone knows the majority of the retail traders are losing money. Even after having access to a free educational site, the retail traders fail to develop a perfect trading system. They rely on emotions and other people’s advice, eventually they blow up the trading account. On the contrary, smart investors in Hong Kong are making consistent profit by using the knowledge of support and resistance level. The majority of the traders will say that they know everything about the support and resistance level. But in reality, they have an incomplete knowledge of it. After reading this article, you will understand how to trade the key support and resistance level with an extreme level of accuracy.
A support zone is such a place in the market which offers a potential buying opportunity. Starting from the novice traders ending with the professional, everyone executes long orders at the critical support level. To find the support level you must connect three significant lows of the market. But do you think this is a great way to find the key support zone? If you use this technique in the daily time frame, you will get a quality buying zone. On the other hand, if you use this technique in the lower time frame you will have a minor support level which is not suitable for long trade setups.
Resistance is such a zone when the price of a certain asset finds an extreme level of selling pressure. The experienced traders execute short orders at the critical resistance zone. Just like drawing the support level, you have to connect three significant highs of the market. To do so, you must have access to a premium trading platform. Feel free to visit https://www.home.saxo/en-hk to learn more about the professional broker Saxo who always offer a high-class trading platform. Once you have spotted the critical resistance zone in the higher time frame, you can easily execute short orders and ride the bearish trend.
Trade execution is fairly easy when you spot the critical support and resistance level. But the smart traders prefer to use the price action confirmation signal. Being a new trader, you should never execute any trades using the pending orders. Learn about the bullish and bearish pin trading strategy since it will greatly help you to execute quality trades. Instead of trading the market with real money, open a demo trading account with Saxo so that you can easily learn the support and resistance level trading strategy without risking any real money.
Managing the risk factors
Though support and resistance level trading strategy is extremely profitable, you should also focus on the risk management policy Never think you can earn huge amount of money taking a huge risk. At times the critical support or resistance level often gets broken due to high impact news. So, these are the time where you have to rely on risk management policy. Regardless of the quality of the trade setup, you should never execute any trade with more than a 2% risk. Try to trade the market with managed risk so that you don’t have to lose a big portion of your investment. Take your time and trade the market in the demo account to learn more about money management.
Dealing with the major news
Trading the high impact news is one of the most effective ways to make money online as a currency trader, you have to rely on long term goals and execute quality trades so that you can make a profit on regular basis. The new traders often ignore the fundamental factors of the market but this is a very big mistake. Though support and resistance level trading technique is very effective, you must rely on the fundamental data. Try to blend these two so that you can find the best potential trade setups. Just learn about the major news and you will see a significant improvement in your trading career.