Technical analysis is the most popular at Forex. In contrast to fundamental one, it doesn't require specific knowledge at economics, ability to compare different factors such as inflation, consumer price index, GDP, sales, etc.
That's why technical analysis is usually considered the simplest and recommended for new traders.
We are to look into one of technical analyses - forex wave analysis. You'll discover Elliott's wave theory and learn several rules letting you trade successfully.
I must mention that wave forecasting is one of so-called "non-indicator strategies", so you don't use any terminal indicators while trading. Default figures (straight line, trend line etc.) are all you need. But don't forget about good sight - you should pick out differed figures from plenty of candlesticks and bars.
The key advantage of non-indicator trading systems is your independence from computer algorithms which are frequently wrong. MT4, along with MT5, has no indicators giving more than 75% successful deals. That's because they're uploaded by brokers not interested in your profit. I cannot say it's impossible to earn with indicators, but right-way non-indicator trading is more comfortable and profitable.
You should be quite experienced for such trading, otherwise you won't mark the right movement. Currency movements doesn't look straight - it's disordered and has subtle direction.
If you can't search for this very direction and pick out the drawbacks - you will suffer losses for sure. From this point of view, trading with indicators seems to be easier, nevertheless it's not that profitable. Tip: if you've decided to trade without indicators, like a pro, use demo-account for a couple of months. Thus, you'll get tough in graph analyzing. After that, start working with real deposit.
This theory says that any market, including forex is behaving according to wave law. There is the main direction, but also «drawbacks» - opposite directions.
Surely, waves following the trend are bigger than those which oppose it. That's why major profit is gained from trend waves.
So, how do traders work and analyze forex with means of the wave law?
Dropping theory, there are two kinds of waves at the exchange.
Impulse wave is the movement directed toward the trend; correction wave is the movement directed opposed to the trend.
You can see both these kinds in pictures of this article. Impulse and correction movements are periodical and change each other. Trader's main objective is to identify a correction wave, place a bet and gain profits from an impulse.
Some traders work either with impulses and corrections.
Here's the approximate step-by-step instruction for a trader:
Most traders use differed figures for convenient trading. Today there is plenty if them and they can be easily studied on the Net. Zigzag is more widespread than others.
For the conclusion, forex wave theory is one of the simplest non-indicator system. If you are a novice at the exchange and want to get experienced, I recommend to choose this strategy, and after that discover other more profitable and complicated ones.
Anyway, I wish you good profits and all the success in trading!
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