Posts Tagged ‘forex graphs’

10.11.2010 Post in Trading

The majority of totally green on Forex traders start their market experience with intraday or short-term trading.  Which can be easily explained, as there is no need in possessing a substantial initial capital for such type of currency market operating; in addition, a trader has a possibility to test the trading methods that he or she has chosen for working.

Basically, the structure of price movement is nearly identical on five-minute and on four-hour charts. Irrespective of the chart, there always emerges a market pattern with the impulsive correctional waves. In order to estimate the efficiency of the developed trading strategy, it will be more comfortable for a market player to analyze it on short time intervals. However, one should keep in mind certain features of short-term trade.

  • Macroeconomic news and speeches of high-ranking officials and politicians. A trader must consider these facts. Right after releases of key news, there emerge fluctuations. It extremely difficult to forecast climbing or falling. Though a trader that is working with a short-term chart should predict a possible price advance before the news release. The best way out is waiting for the news publication, of course, if there are no open positions on the account. If the deals bring profit, one should fix it, and the positions with losses need setting up the stop-losses.
  • A trader should make allowance for the trading session as well. Four trading sessions are known: the Pacific, the European, the Asian and the American. As the market is functioning 24 hours a day, one is able to conduct deals at any time in a 24-hour period. Nevertheless, during the night there can be either strong wobbles or, on the contrary, trading is slack. Consequently, it is essential to choose carefully the time of trading and the currency to work with.
  • Besides, the choice of the day for trading is also very significant. Here Monday and Friday perform the main role. On Monday, the trading week opens with gaps, in particular, if important events took place during the weekend. And at the beginning of the week traders start to observe the situation on the market. Friday, on the other hand, facilitates sharp price jumps. It is caused only by a trading session coming to an end. The majority of traders do not leave open the positions through the weekend, thus, by closing the deals they raise the price dynamics.

These are the general traits of short-term trading.

The interview was obtained by Anna Shubina ,
InstaForex Clients’ relationship manager