Tuesday, 1 August 2017

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Exness' forex eBook "Forex tips and tricks: 10 ways to improve your trading strategy"

This Forex eBook was written by Exness for helping new traders and and also experience traders trade smarter and safer. After reading this forex eBook, you will understand more about timing, location, risk management when trading forex. If you don't know what Exness account should you open. You can read this article

Chapter 01 - Exness' forex tips and tricks: 10 ways to improve your trading strategy

Remove forex trading tools that you don’t use

How many indicators do you follow? Moving averages, MACD, Stochastic, RSI, and a couple of others?

We would recommend to first clean your workspace and make it as simple as possible. Some traders only start to develop after removing all indicators, leaving the naked price chart alone.

The more indicators you have, the more “signals” for buy/sell you receive. For instance, a moving average tells you to buy, but at the same time, the RSI alerts you about an “overbought” market condition. Having too many indicators can lead to an overwhelming amount of conflicting information, thus confusing you.

Cognitive dissonance is a serious obstacle to successful decision-making!

In forex trading, there will always be cognitive dissonance. Bullish and bearish trading signals coexist every single moment and you never know exactly which signal to follow. With this in mind, it is best for you to simplify your decision-making process. The easiest way to go about it is to identify and recognize the function of each tool, and why you choose to include it in your workspace.

Every forex tool (indicator, chart) helps to:

  • Identify a trend
  • Measure the volatility and tempo of price action
  • Measure average deviation from the mean
  • Find an exact entry point
If you are a trend-following position trader, active trends and decent entry points are important to you while the rate of intraday change in prices may drop out of your list of priorities. Your tools in this case may be reduced to two moving averages (fast and slow) for the identification of the trend direction and the candlestick formation for entry.

If you are a momentum trader, you may not need to know where the trend is headed—your money is earned when the market breaks out from narrow consolidation areas. In this case, you need to know the current level of volatility—in case it drops to new lows, you can expect the market to break soon. Your tools in this case are the price chart (for identifying consolidation) and Average True Range indicator (for measuring volatility). Candlestick formations are not necessary in this case because the market breaks quickly without showing any candlestick patterns on the way.

If you are trading in a range-bound market, you need to know possible trade locations for reversal. For this, you need the Envelopes or Bollinger Bands. Once the price comes to the lower or upper band of the indicator, you can monitor for specific candlestick reversal patterns.

Please note that the above scenarios are just examples. You may use different tools for your trade; the key here is to know why you use certain tools and what you want to achieve. Knowing the answers to these questions can simplify your forex trading.

Exness' key Takeaway - Forex tips

Get rid of tools that you don’t use. Create a list of all your current analytical tools and try to state the purpose of each in two to three sentences. Doing so helps you realize which tools are important in your decision-making process and helps in reducing cognitive dissonance

Next chapter 2: Trading in volatile vs noisy environment in Exness

About ForexGuru

Hi, I am Peter, a 9 years experienced trader. I have traded with many brokers and there are only some brokers are good to go. So, what i shared you is very useful for your trading career.

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