Trading Tips for Newbie in Forex and Stock Market
In this article, we cover some trading tips for newbie staring Forex and Stock market. We will use the Q & A approach to share the useful information for newbie. Below the questions and answers will explain the key elements of successful trading in Forex and Stock market.
What is trading in Forex and Stock Market ?
Trading is a profit seeking operation with buying and selling the financial asset like a currency, stock or cryptocurrency. Profit seeking in long run is often based on materializing the regularities in the financial market. If anyone made money from the market in long run, this means that the market was not random, at least to them. In another words, you have found some sort of regularities in the market. Some people call these regularities as correlation, pattern, trend, wave, volatility, holes in the financial market, or many other names. But they are all regularities regardless of how you call them. Even you are doing some sort of arbitrage trading, you are still making use of some regularities that are known to few people. For example, in this case, you have found a pattern that some place selling the finanical asset cheaper than the other place or the other way around. Typically, this sort of arbritage information in financial market can be found using positive or negative correlation between two brokers or two exchange.
What are the regularities you should know for live trading ?
There are regularities from simple to complex in the financial market. To make your life simple, I have gathered five most occurring and most important regularities for trader in the price pattern table. They are Trend, Seasonality, Cycles, Fractal Wave and Correlation. Typically each trading strategy around Forex and Stock trading is designed to capture one of these five regularities. The best way to understand these regularities is to visualize the market using the chart. Typically, the candlstick chart is used mostly in Forex and Stock trading. When we use the candlestick chart, we can see these regularities in the chart. We can make a buy or sell decision based on our understanding of the market.
How to capture these regularities for profit ?
To visualize the market and to understand the regularities in the market, it is important to understand your tools. Depending on the tools, you may or may not able to identify the specific regularties existing in the market. If the market consists of a simple regularty, then you may not need any tool. However, this is very unlikely in the modern financial market. In addition, you need to understand why a particular tool is designed. Any tools used in the financial market has some assumption around the tool. When the assumption of the tool does not fit for the market, the tool can fail. Before blindly applying any technical indicator like MACD, CCI, RSI, etc, you need to ask how these tools are constructed and what the purpose of these tools are. This is the most important question for the successful trading. For example, the price action, price pattern and chart pattern are the direct price analysis. The main assumption of the direct price analysis is based on the endless zig zag movement of the price, also known as the fractal wave.
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Any further tips on improving profit ?
Trade with deep decision making instead of superficial decision making. It is the quality matter and not quantity. It is useless that you trade fast reckless. Many number of trade will not guarantee your success. Even for one trade, put the quality piece of information technically (from chart) and fundamentally (from surrounding market environment) together.
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