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Most of the people believe that trading is quite simple as it involves only two parameters: buy and sell. But in order to trade properly in the currency market, a trader needs to realize that these two parameters are quite complex and intricate in nature. In the case of the currency market, one needs to determine the specific sequence of steps that can help them execute trades that are guaranteed to be profitable.
Here we are going to discuss the three basic steps that can help you make that perfect trade and earn a great deal of profit:
Step 1: Analyze market trend
The currency market is quite complex but there are only three directions in which the market moves. These are up, down and sideways. Most of the time currency markets are in a sideways situation so the best way to analyze the current market scenario is by assuming that the market is currently trending in the sideways direction and then apply range bound strategy to determine the actual trend prevailing in the market. The advantage of using range bound strategy is that it works on both sideways and trending markets whereas trending strategies work only when the market is going up or down which happens only 10% of the time.
Step 2: Deciding to Entering
The process of identifying the entry point into the market needs to be clear and concise. This is due to the fact that it is very important that you enter a trade at the right time so as to earn a good enough profit. Apart from this higher profitability of the trades executed can be ensured only if you have identified the correct setup and entered into the market using that setup.
Step 3: When to exit
This is one of the most important steps when it comes to trading forex. This is due to the fact that this is a step where the trader actually gets paid for his efforts. One needs to understand that greed is not good for profiting in the forex market. A fixed profit objective of 10-30 pips is much better than having a varied profit objective. This is due to the fact that by using such a technique you are increasing your chances of having a profitable trade.
These three basic steps, if followed correctly, can help you earn great profits in the currency market and can even empower you to leave your current job and trade forex full time and reap benefits that you have never seen before.
