There are hundreds of questions that can arise in a CFD trader’s mind while trading. He has to be cautious of the market’s current state and upcoming potential trend. He has to forecast and track down which way the market will move. Technical traders need to answer all these questions and look into different factors to find out those answers. Over the years, experts and professionals have recognized and outlined different market principles applicable to technical analysis.
Table of Contents
Be a Better Technical Forex Trader
Let’s get dive deep into them
1. The Volume is More Important than the Price
An often misjudged yet crucial trading rule is that traders should take volumes more important than price. Following volume, a trader can get the right signal about the market’s movement. Indications given by the volumes are highly reliable. Experts follow signals provided by volumes even for confirmed trends.
During bullish times, massive volumes will be observed. The reason behind such bulk volume is the support provided by different funds. A plummeting volume is a warning of a potential downtrend. By observing a volume, investors can avoid joining a trade just before the starting of a downtrend. Remember, trading is not an easy game. You have to use the right tools and for that you need to choose a broker like Saxo. Visit the website here and soon you will get an idea of how the premium tools can help you in trading.
2. Using an ADX Indicator
ADX indicators are useful in detecting a trend. The index helps measure the momentum of a movement or a market’s direction. A rising ADX line is a reliable indication of a bullish trend. Conversely, a downward ADX line is a general indication of a trading market. An ADX line advises traders on which market indicators to deploy to work out the state of a market.
3. Exploit MACD
MACD is an indicator that works along with an oscillator converging in the moving-average system. It may sound quite problematic already. When both lines of a MACD are above zero, and a slower one is crossed below by a faster one, it is a good sign for selling.
In opposition, when the two lines are below zero, and the slower one gets passed by the faster one, signal an ideal buying moment.
Oscillators for their accuracy in providing with the right indications are very popular to the traders. Especially for the newcomers, oscillators are like lifesavers. They help investors to locate an oversold or overbought market.
They will tell a trader about a long-celebrated direction and its after-turn. Among many kinds of oscillators, the most used ones are the RSI and the Stochastic. Both of them are pretty straight forward and beginner-friendly to use.
4. Moving Averages
No discussion about the technical analyses of Forex will be completed until it includes a portion for moving averages. Moving averages indicate every change of the price. Though their given signals are nearly accurate, the regrettable part is, they don’t signal in advance.
The most practiced method is to count two moving averages to find a signal. In this method, people track one shorter and one long line and find the places where they cross each other.
Learning to draw trade lines would be of great use for the technical analysts. The process is not so hard. For a bullish trend, they have to recognize two juxtaposing lows and draw with them. The opposite will be applicable to downtrends.
By learning and practicing drawing these trends, a person can easily get a clear idea of all kinds of the markets and their varied natures.