When done properly, trading foreign currencies can be an excellent way to obtain the lifestyle that you have always wanted. Trades can be made anytime between Sunday evening and Friday afternoon, which gives you the chance to trade regardless of your work schedule or other obligations. However, if you do choose to trade, make sure that you have charts and know how to use them.
Charts Help You Gain Insight Into the Market
Spotting support and resistance levels is one of the most important skills that a forex trader can have. This is because price likes to make its way back to levels that it has visited in the past. Without a chart, you won't be able to spot support or resistance zones. This turns the art of making profitable trades into nothing more than gambling.
You Want to Predict Where the Market Is Going
Just because the market has been trending up for the past several hours doesn't mean that it will continue to go up during the next 60 minutes. However, just because the market dips for an hour or two doesn't mean that an uptrend is coming to an end. To truly understand where the market is going, you need indicators that you can use to gauge trader sentiment.
For instance, you can use Bollinger Bands to determine if the market is overbought or oversold. You could also choose to use the RSI or MACD indicator to determine when the market is going to cycle from overbought to oversold or vice versa. Using these in tandem can help you to feel more confident in your assessment of the market and the trades that are made based on that assessment.
Use Charts to Backtest Your Ideas
Prior to placing live forex trades with WigMarkets, it is important to have a strategy that has been thoroughly backtested. Most charts available these days allow you to look at data from several months or years into the past. Analyzing this data can help you spot patterns in the market that can be leveraged to make a profit. Generally speaking, a strategy should work at least 60 percent of the time for at least 40 days to be considered valid. It is also a good idea to make demo trades using your strategy before you put any real money at risk.
Create Price Alerts On Your Charts
As there are many different markets that you can trade at one time, it is impractical to monitor them all at once. Instead, you should ask your charting software to alert you when a market hits a price level that you want to buy or sell at. By planning your trades ahead of time, you increase your odds of making money working with WigMarkets or other brokers.
While learning how to trade forex is an acquired skill, it can be a lucrative one to possess. This is because the concepts that you learn today will be applicable well into the future. Therefore, it may be worth your time to download a charting tool that has real-time and historical data to help you in your trading career.