There is a saying that the 3 crucial words of wisdom for novice traders using daily chart Forex strategy are – Managing Risk, Quality and Time.
With proper risk management, traders can reduce the sum of capital for each trade, if say the market does behave in an opposite direction. Experts always suggest that a trader should not allow 1.5 - 2% capital risk on each of their trades. This allows them to stay in a safe zone even when they are losing money.
One could always opt for quality trading signals rather than go all out and trade with every potential trading opportunity. Adopting the latter mode of trading only makes one lose one’s sound trading habit. Plus, they also become emotional wrecks thereby making traders indulge in overtrading. That is never a good sign.
Lastly, one should invest ample time in learning about the market and familiarizing with their daily charts Forex strategy. Doing so will only benefit them when they enter the market with their real money.
However, that’s not all.
Here Are Some More Tips For Newbies Using A Daily Chart Forex Strategy:
Finding Out the Trend:
There is a well-acknowledged fable in Forex that Trend Is a Trader’s Friend. Keeping that in context, the primary goal of a trader using a daily chart Forex strategy is to look at previous 6 months of price readings. They should read the price swings which have taken place due to Price Action.
If one trades the EUR USD and finds that the previous Price Action reading for the last 180 periods shows an up-trending market bias, that is a clear sign to buy trades. If the situation is vice-versa, it means a Sell Signal.
Make Use of Larger Stops and Small Leverages:
The 2nd tip for traders using Forex daily chart system is making of smaller leverages. Larger Stops are also equally important as they help subdue the risks somewhat. However, with larger Stop losses, many traders take it for granted that it means putting more of their capital at risk- which is very wrong. The whole point of using larger stop losses is to prevent being taken out of the market precipitately.
One cool indicator which traders can use regardless of whatever Forex strategies for daily charts is the ATR- Average True Range. With this indicator, one can find out the average currency pair movements over a specific period of time. As one finds the value, traders can use it to set their appropriate Risk Reward Ratio.
Having Trust in one’s trading Strategy:
There is no such strategy which is known to present 100% trade impeccability. Experts clearly state that the success of a strategy is highly dependent on the skill level of a trader and how they make use of it during hectic market situations.
So, those who are new to using daily chart Forex strategy must have faith in their system. Rather than looking for too many experimentations, they should stick to the method which works for them when demo trading. It’s what the ‘Now’ successful traders did when they were newbies and it is what every new trader should look to do over a sustainable period of time.
So; Learn. Invest. Prosper
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.