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Want To Trade Forex Like An Expert? Control Your Risk

by with No Comment Forex

Want to step above the crowd? Knowing when to cut your losses and being consistent and disciplined about doing so can help you truly elevate your trading game.

Why Controlling Risk Is Key To Developing As A Trader

At first glance, this sounds rather obvious, doesn’t it? It may surprise you, but far too many traders lose more money than they can afford by sticking with bad trades in the hope that things will turn around for them. In reality, this rarely happens.

Smart traders, in contrast, set firm stopping points with their broker before ever opening their trades. If their losses drop below the level set, they understand that the best thing they can do is to walk away.  While this sounds easy enough to do, actually doing it consistently in real life can be quite hard. It’s basic human psychology to try to hold on to what we perceive as ours and to recoup losses. Fighting through that urge and learning to walk away will put you head and shoulders above many traders, however.

Top Tip: Planning Is Key

Have a plan about how and when to cut your losses and be disciplined and consistent about sticking to it. For example, determine what percentage of your equity can you afford to lose before making a trade and set a stop-loss order to ensure you don’t go beyond it.

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blog13

How To Develop Your First Forex Trading Plan

by with No Comment Forex

The ability to create and follow a forex trading plan is one of the most important things a forex trader must learn. Many new forex traders fall into the trap of either not creating a plan or failing to stick to the ones they do create. Doing either is a big mistake and leads to irrational, hasty, and emotional decision-making (very bad things when it comes to forex).

The process of creating a forex trading plan will help you understand your trading strategy thoroughly and serve as a blueprint for making trading decisions. If you design your trading plan correctly, the unexpected should not be an issue  – you should have already thought out and have a course of action for just about anything that might occur.

So how do you create a plan? In this post, we’ll take you through it from start to finish.

Oh, one thing to note before we go any further:  

Having a trading plan alone is not enough. You should also be keeping a detailed trading journal to help you keep track of how consistently you are following your trading plan. In the following article, we’ll take you through the steps of creating your first plan.

1. Determine What Kind Of Trader You Are – And How Many Trades You Should Make

The first step to creating a forex trading plan is to determine what kind of trader you are based on the frequency of your trades and the duration over which your trades run. If you are a day trader whose trading style revolves around scalping, then you should plot your trading plan with a 24-hour timeframe. On the other hand, if you are a swing trader whose trades usually span several days, you should use a week as your planning horizon. To determine the number of trades that you should make within your trading horizon, you should add up all your winning trades  over your chosen time period and then multiply them by 1.2. For example, if you make 15 trades a week and only five are winning trades, you should not make more than six or seven trades each week. The idea is to increase your win rate and your chances of being an effective forex trader.

2. Maximize Your Opportunities

By limiting the number of trades that you make on a daily basis you limit your opportunities in the markets. This is not a bad thing. Limiting the number of trades you make on a daily basis should allow you to focus on finding the best trade setups that match your trading plan. By making fewer trades, you will be able to focus more on analyzing your trades and on making trades that have a beneficial risk/reward ratio.

 

3. Eliminate Emotional Trading

As a beginner forex trader, you should strive to avoid making trades based on your emotions by always sticking to your predetermined trading parameters. By limiting the number of trades you make each day, you can more easily avoid making ‘revenge’ trades. This can happen after you make a bad trade when you make further trades in an attempt to make up your losses. Many new traders succumb to the urge to make emotional rebalancing trades in order to make up for their losing trades. Most emotional trades usually carry higher risk because their main objective is to recoup the losses on a previous trade, which might be significant.

4. Set Entry Rules

Most beginner traders start out being very excited about the movements of the currency pairs they want to trade and will typically open new trades based on an instinct alone. This is not the best way to trade as, in many cases, traders end up with open positions that they have not fully thought through or researched. Your trading plan should clearly describe the signals that you will look for before opening a trade. You should include the different parameters that the indicators you are using must meet in order for you to enter into a trade. The more detailed your plan is, the better your results will be. Having a clearly defined entry rules will ensure that you remain disciplined in all your trading activities.

 

5. Set Exit Rules

Having exit rules is just as important as having entry rules because having predetermined exit signals helps you maximize the potential gains on your trades while limiting your losses. Your exit rules should be aligned with the maximum risk you are willing to take on each trade as well as the profit potential of each trade. For example, a trader with a 1:3 risk/reward ratio would be willing to risk USD 50 dollars for a profit of USD 150 on each trade. This means that the trader should exit a losing trade once their losses reach USD 50 and should look to exit a profitable trade with a  USD 150 profit.

6. Set Stop-Loss And Take-Profit Levels

 

Now that you know the importance of setting entry and exit rules, stop-loss and take-profit levels are  next. It is crucial that you set a stop-loss level on every trade that you make in order to limit your potential losses one every trade. You should think this through ahead of time and should tie your stop loss to the percentage of your trading account that you are willing to risk.

 

Conclusion

Now that you have a good understanding of how to create your trading plan, you should get to work creating one using a free Demo trading account The Demo account will allow you to test and refine your current trading plan on either our MT4 of MT5 platforms and will enable you to pinpoint weaknesses in your plan. Once you are satisfied that your plan works in you Demo account, you can consider using it in you live account. 

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Trading Strategy: Forget Price, Try Trading Volume

by with No Comment Forex

Are you ignoring the volume bars at the bottom of your price chart? It’s not unusual. Loads of traders prefer to track prices or

f

s when choosing a currency pair. At first glance, volume doesn’t seem to be the most powerful indicator, but there’s more to trading volume than meets the eye.

 

The volume section of your trading platform shows the total lots of the selected currency pair being bought or sold. For example, whenever heavyweight investors start opening huge trading contracts, trading volume quickly rises. Moreover, if the world’s media channels suddenly popularize a particular currency pair, trading volume tends to rise shortly after as thousands of traders open orders. In other words, trading volume is—among other things—a popularity meter. But how is that useful to you?

Volume and leverage

Before we even think about placing an order, we should first consider how volume relates to leverage. “Why leverage?” you may ask. What could volume and leverage have in common? Leverage is an important choice when you first go through the signup process. With Exness, you can open and manage multiple trading accounts from one convenient Personal Area. Each account can have a different leverage setting, which is very useful if you wish to trade both high volatility and low volatility pairs. The rule of leverage is simple and will give your trading strategy a solid foundation. low trading volume = low liquidity = high volatility = lower leverage

high trading volume = high liquidity = low volatility = higher leverage

A highly volatile currency pair could create huge profits when combined with high leverage, but such fragile orders tend to ‘Stop Out’ underfunded trading accounts in minutes when massive price fluctuations occur. Not recommended! Instead, try comparing the trading volumes of your favorite pairs with the major and minor currencies. If your pair is experiencing lower volume, then you might want to use a trading account with a lower leverage setting. Checking the volume of your preferred currency pairs could save you a lot of disappointment.

Strong price vs high price

Volume can be used to measure the ‘strength’ of a price shift, which answers a common question every trader asks themselves on a daily basis. “Is this price shift a coming reversal or just another bump in the road?”

Let’s consider a currency in a long-term downtrend. One day, the price begins to rise. Is this a breakout in the making, or just another fluctuation? A change in trend depends on many factors, but the first place to start checking is the trading volume. If the trading volume is low at the time of a price increase, then the market move is probably just a hiccup and the downtrend will return with a vengeance.

On the other hand, if the volume has been higher than usual, then you might be seeing the early stages of a price reversal. In a nutshell, low volume direction changes don’t stick. There are always exceptions to every trading strategy, but spotting a weak reversal is a very strong indicator.

How to test the trading strategy

Try opening up your trading platform and targeting a currency pair on the Market Watch list. Look back over the last few weeks until you find a significant fall in the trading volume, then check what happened to the price shortly after. Match your leverage to the average volume, then wait for the next possible breakout. If the price is reversing and the volume is rising, then the pair could be an attractive trading opportunity that deserves investigation or investment.

 

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3 Ways MetaTrader 5 Has Improved On MetaTrader 4

by with No Comment Forex

How can you take something beloved by a global community and make it better? With MetaTrader4, MetaQuotes built a trading platform that has become the standard of retail forex traders around the world.

With the global trading community demanding more customization, greater control, and more capabilities, MetaTrader have gone one better and created a next-generation platform called MetaTrader 5.  

Available with Exness on Demo accounts, we wanted to give you a sneak peek at the features that make MetaTrader 5 special.

Customizable Approach To Trading: New Features In MT5

There’s nothing more frustrating than not being able to get your chart set up the way you want it, or not being able to place your order exactly the way you want it to be placed.

With MT5 a lot of these frustrations have been eliminated.

Timeframes. MetaTrader 5 offers 21 different timeframes, vs just nine in MetaTrader 4. This means you can get exactly the right chart for your trading strategy, rather than having to make do on MetaTrader 4.

Order types. In MetaTrader 5, you can access two additional pending order types, “buy stop limit” and “sell stop limit”. You can find out more about these in our blog post specifically on the subject of pending order types.

What’s more, with MetaTrader 5 subtle changes in the “navigator” pane mean that you can find what you want, when you want, at a far greater speed.

Analysis

The changes to MetaTrader 5 go beyond simple user experience. Improvements to analytics, testing, and tool building demonstrate how much MetaTrader 5 has been created with the experienced trader in mind.

Fundamental analysis. With MetaTrader 5, traders can benefit from access to economic and industrial news right within their terminal, as well as enjoying a economic calendar highlighting upcoming announcements from around the world. These new tools come bundled with MetaTrader 5 right from launch.Technical analysis. With MetaTrader 5, right out of the box traders get access to 38 indicators and 44 analytical objects, versus 30 indicators and 33 analytical objects in MT4, with a vast number of additional solutions available for free via Code Base or for a price from the new Market feature.

Expert Advisors

EAs were always remarkably valuable in MT4 because they allowed traders to automate some or all of their decision-making to a complex algorithm that could analyse trends and place orders.

In MT5 this functionality is further increased, made possible by the highly advanced MQL5 programming language.

Programming. MT5 is designed from the ground up to empower experienced traders to build powerful EAs themselves. With a programming language similar to C++, it is easy for traders to get their heads around the process and start building. At the same time, less experienced will benefit from access to better quality EAs, which they can test and apply.Market. Even more exciting for experienced traders is the new Market feature, which allows traders who have programmed EAs themselves to make money by selling them to the community, right from the terminal.

Using MetaTrader 5 With Exness

It couldn’t be easier to try out the MetaTrader 5 platform for yourself with Exness. Here’s a simple guide the getting started:

Open an MetaTrader 5 trial or MetaTrader 5 real account from your Personal AreaDownload the MetaTrader 5 desktop or mobile terminal from the Exness downloads pageEnter your account details to log in

What’s more, MT5 accounts can now be used with the WebTerminal. Accessible right from your personal area in the left-hand menu, this means you can start trading on MetaTrader 5 without anything to download!

Try it for yourself.

Open an EXNESS MT5 account today.

 

Open an FXTM MT5 account today.

blog8

Quasimodo Pattern (Over and Under)

by with No Comment Forex

Quasimodo Pattern (Over and Under)

TABLE OF CONTENTS:

Easy guide to trading the Quasimodo Pattern

What is the Quasimodo (Over and Under) Pattern?

Conclusion:

Easy guide to trading the Quasimodo Pattern

The Quasimodo Pattern or Over and Under pattern is a relatively new entrant to the field of technical analysis in the financial markets. Although new, the Quasimodo pattern is a commonly occurring theme that is more frequent when price carves a top or a bottom or when price begins a major correction to the trend.The Quasimodo Pattern, although complex as it might seem is actually very simple. This trading pattern is especially powerful because when it occurs, in most cases, traders will notice a confluence with other methods of analysis.For example, when a trader spots a Quasimodo pattern near a support or resistance level, it increases the confidence of the trader or the trading probability. Likewise, when trading divergences, when you spot a Quasimodo pattern, that confluence can be used to trade the divergence set up with more confidence.As we can see from the above, the Quasimodo pattern is not a trading strategy by itself but is more of a confluence pattern that can be used to confirm a trader’s bias. Of course, the Quasimodo pattern doesn’t appear all the time, but when it does, traders can be sure that the market offers a high probability trade set up.

What is the Quasimodo (Over and Under) Pattern?

A Quasimodo Pattern is simply a series of Highs/Lows and Higher or Lower highs or lows.

Quasimodo Short Signal Pattern

There should be a prior uptrend in the marketsPrice makes a new high, declines and makes a new local lowPrice then rallies above the previous high to mark a new higher highPrice then falls to form a new lower lowPrice then rises towards the initial high (but does not make a new higher high).

The fifth level in the set up is the trigger, where a short position is taken. Stops are set above the higher high and the take profit level is up to the trader.

Quasimodo Long Signal Pattern

There should be a prior downtrend in the marketsPrice makes new low then makes a small rally and forms a local highPrice then declines to form a new lower low taking out the previous lowPrice then rallies to make a new higher high and then declinesThe final decline is equal to the first low

The fifth leg in this pattern is the trigger for long positions with stops set to at or below the lower low

Quasimodo Long Signal Pattern Examples:

Quasimodo Long Example #1

Price is in a downtrendPrice then makes a new low at 99.923 and then makes a new local high at 100.274Price then declines and makes a new lower low at 99.983Price then rallies to make a new higher high at 100.38 and then declinesThe final leg in the decline is just a few pips above the previous low. This triggers a long signal

Here is another example of the Quasimodo Long example:

Quasimodo Long Example #2 Quasimodo Short Signal Pattern Examples:

Quasimodo Short Example #1

Price is in an uptrendPrice then makes a new high at 1.5251 and then declines to make a low at 1.5187Price then rallies to make a higher high at 1.5321 and then declinesA new lower low is posted at 1.5165Price then makes a modest rally and this high stalls a few pips close to/above the previous highA short entry is then taken with stops near the highest highThere is also an additional confirmation yet again with the RSI divergence as well

Another example of the Quasimodo Short pattern example is given below:

Quasimodo Short Example #2

Conclusion:

As we can see from the above, the Quasimodo or Over and Under pattern is a relatively simple pattern, which when used in conjunction with other trading strategies or signals offers a great way to increase the probability of a trade set up.
Open an Demo Account and test this pattern.