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Gerard Moore 29 / March / 20

The importance of forecasting the price and strategies in trading


Is forecasting price movement important for maximum profit?
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Main strategies to implement in trading

There are certain rules in trading that relate to holding positions. If you are a “scalper” and take small movements within the day, then your trading result will increase if you learn to look at the market globally.

You need to learn the basics of medium-term strategies. Then combine scalping, and begin to take large movements with minimal risk. In other words, our stop will be 19 points, and the profit will be 170. The risk to profit is a little more than 1/8. In some cases, it can reach 1/12. Among traders, this approach to trading is becoming very popular, but at the same time it is quite problematic. Why?

Scalping is a type of trading strategy, the rhythm of which not everyone can withstand. As this trading line is sometimes called - “strong nerve strategies”. Not everyone has so much emotional stability when they regularly throw you out of the deal. The classic profit-to-loss ratio is 3, 4 times the stop, but some European traders are content with the risk-to-profit ratio, 1в „„ 2. And here scalping is combined with a medium-term.

Scalping is often divided into different categories. Someone works on the breakdown of the level, and someone works inside the day in overbought or oversold zones. As soon as the price breaks yesterday's low, they pay attention to volumes, and if the signals converge, they enter the market. But if you add a medium-term for further retention, then the trader needs to mark the zones of trading and learn to measure their strength. For example, we mark everything about traders and flats (side frames) on the hourly time frame as obstacles to our movement. And the scalping profit, we are not basing on the ratio of risk to profit 1/3, but look at the horizon. Our profit will be high, at a certain resistance zone. How to find out the strength of the resistance zone?

You can determine the weight of a particular zone by the time interval. If the flat formed for 2-3 days, then probably there will be a rebound from this zone. But if the zone consists of 4-6 hour candles, then with an 80% probability the price will be pierced like paper. After the price has passed the previous flat, do not rush to immediately drag the price at a loss. We need to wait until the price breaks through the next zone with an impulse.

After, we can put our stop under the first zone. The bottom line is that if the price has pierced the zone, then it will return to its borders to say goodbye. Refunds occur in 85% of cases. And if we move our stop, the price will touch our order, and this is a very unpleasant feeling when the price goes, but without us. You can move at a loss only after the second zone.

Predicting the price to hold a trade increases our trading result, but in this analytical approach, it is important not to overexpose the trade. If the price gives you 1 to 7, then it’s better to take it, than then the rollback will begin and give only 1/3. Greed in the market is a separate issue, but overexposing transactions is not entirely good.

There was one trader in our region, so he took only 20 points from each transaction and a day he opened 200 transactions. He closed those deals that were not according to the script at the end of the day. He had about $ 70 a day. But once he decided to enter a long position on the euro / dollar currency pair with a limit lot, and the price gave 40 points of profit, but he did not fix the deal and left it the next day. The next day, the price of news collapsed, bringing the score to zero. $ 3,000 was lost, and after that this trader became disappointed in Forex and went into the restaurant business. And if he traded according to the strategy that had been worked out for years, then he would still remain a successful trader and business would be unnecessary.

Everything is not so clear here. Someone is better, it turns out, to work in short positions, and someone knows how to withstand one transaction at the maximum. Therefore, check what you do best and improve your skills in your individual direction!

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