The diagram above is the timing chart for the euro/usd currency pair ..All currency pairs have simular timing charts although they may vary somewhat. This timing chart is simple price points over time. Take a few minutes to study the diagram. First the price points always start on the left and end on the right (time can be hours or days or months). The lower value start at the bottom at 1.2977 and goes up to higher value of 1.3199 at the top There are much more information embedded in this chart but for now we will just consider the basic concepts of placing our first real money trade . The first technique is to Buy the currency pairs at the lowest point possible then Sell it at its highest point thus locking in profits.. A second technique also exists where the pair can be Shorted when it reaches the highest point at 1.3199 and take profits when it trade back down to the 1.2977 levels.. Our basic idea here in placing our first real money trade is to Buy 1 mini lot of the euro/usd at 1.2977 level and wait over time until the trade reaches the 1.3199 levels before closing out this trade and look for another trade opportunity. In this trade we would have gained over 200 pips in profits, however if the trade went against our trade position we would have lost over 200 pips. There are 3 basic time frame from which to trade forex.. short term trades otherwise called interday trade, medium term trade lasting few days and lastly long term trades lasting several months. We will begin with short term trade. As a rule short term trade usually last 3 hours. What this means we would Buy the pair at 1.2977 level then monitor the pair for 3 hours. if the pair is trading up in our favour we would stay in the market for 3 hours, how ever if after making some gains in our favour the pair begins to trade against our BUY position we would terminate the trade and get out of the market before the 3 hours time frame. If on the other hand the pair traded for 3 hours with noticeable profits we would get out of the market and begin to look for other opportunities. Reason for getting out of the markat at this point is that most short term trades retrace after 3 hours intervals. In short term trades you should enter your trade position early in the trading day and exit 3 hours later. In general 2 to 3 pip spread is charged when trading the euro/usd pair. This 2-3 pip spread is deducted automatically from your account up front as soon as the trade is placed.. The spread can be verified by placing the trade and watch to see where the pair starts trading. If the pair start to trade at -3 , then it simply means that the spread is 3 pips.
Comments: In our next post we will analyse the trade to find out if it is a good trade placing our bets.
No comments :
Post a Comment