Learn Forex Trend Reversal Strategies - Counter Trend
A trader must come up with a strategy which they stick to when trading the online market. A trader must have the discipline to s broken then the sentiment of the strategy at all times. That's why it is better to come up with strategies which are profitable - profitable systems will be a lot easier to follow & stick to. This is because one knows that by following the rules of their system they'll be successful.
A carefully designed trading strategy that has been back tested and proven to generate profitable results is one of the keys to becoming successful when trading the market. This type of strategy will make it easier for trader to follow the rules of their strategy because they already know that the strategy is profitable, therefore keeping up the discipline to continue following the strategy will be much easier.
Successful trade strategies will also include:
1.Money management rules
2.Forex Psychology Mindset
These two will greatly improve the success of any system.
However, Let us look at price action strategy before narrating more on money management & forex psychology.
Counter Trend Strategies
Counter trend strategies are best used to place trades on major resistance and support areas where price is likely to reverse. These are the support & resistance levels where price has not broken before.
However, this strategy isn't the most reliable forex method because trying to catch the market top or the market bottom is not the best strategy as the trend may continue to move in the original direction of the trend for quite some time.
This strategy should therefore only be used to trade currencies that rarely trend - these are the currencies that move in a tight range. Traders can draw support & resistance levels of the price range and they will then use these levels to open trades - traders will open buy trades at the support level & traders will open sell trades at the resistance level. For a range bound market the prices will keep bouncing off these points and the traders will open trades & keep trading these price bounces.
Trading Strategies Tips
Once one has come up with their strategy, they should also include the following so that to make their strategy more successful.
1.Money Management Rules
2.Forex Trading Psychology
Money Management Rules
Money management rules should be part of your forex strategy - the rules will help you as a trader to manage risk. This means that you will use two rules of forex money management - these are risk:reward ratio & drawdown reducing method when placing your forex trade transactions to determine the lot size that you will open in the market. The most popular equity management rule use in forex & the one that you should also add to your plan is the rule which says a trader should never risk more than 2% of their trading account balance on any one single trade.
To know more about these two equity management rules, traders should read the money management guide that's on the learn forex lessons section of this site under the key concepts courses.
FX Psychology Mindset
In order for one to become successful when trading the market one has to learn about psychology. The forex psychology or mindset that is required to become successful in forex is one that avoids the emotions of fear and greed while trading the market & is a mindset of total discipline that one will follow all their rules & their forex strategy & only trade with signals that are generated by their forex strategy. With discipline one won't trade unless their strategy gives a signal. A trader will have the mindset of only following their system 100 % all the time without second guessing the system. A disciplined trader will also not place trades in the market just because the currency market has started to move up-wards or downwards, instead a trader will wait for a signal to trade to be generated by their forex strategy.
In order to know more about psychology & how to manage emotions while trading the online forex market a trader can read the psychology tutorials from the learn forex lessons section of this site under the key concepts tutorials.
