Forex trading strategies

Analysis of transactions and tips for trading GBP/USD The test of 1.2623 on Monday afternoon, coinciding with the drop of the MACD line from zero, prompted a sell signal that should have led to a price decrease. However, the signal only resulted in losses, as the bearish market did not continue. Data on the UK's service and composite PMI lies ahead, and they could lead to a further drop in GBP/USD provided that the reports show a downward revision. This means that market players should be inclined more to short positions, especially in the morning. If sellers do not show activity after updating the monthly lows, it may be appropriate to consider long positions.   For long positions: Buy when pound hits 1.2621 (green line on the chart) and take profit at the price of 1.2671 (thicker green line on the chart). Growth will occur amid very good PMI data. However, when buying, ensure that the MACD line lies above zero or just starts to rise from it. Pound can also be bought after two consecutive price tests of 1.2570, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2621 and 1.2671. For short positions: Sell when pound reaches 1.2570 (red line on the chart) and take profit at the price of 1.2530. Pressure will increase amid weak statistics. However, when selling, ensure that the MACD line lies below zero or drops down from it. Pound can also be sold after two consecutive price tests of 1.2621, but the MACD line should be in the overbought area as only by that will the market reverse to 1.2570 and 1.2530.   What's on the chart: Thin green line - entry price at which you can buy GBP/USD Thick green line - estimated price where you can set Take-Profit (TP) or manually fix profits, as further growth above this level is unlikely. Thin red line - entry price at which you can sell GBP/USD Thick red line - estimated price where you can set Take-Profit (TP) or manually fix profits, as further decline below this level is unlikely. MACD line- it is important to be guided by overbought and oversold areas when entering the market   Important: Novice traders need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp fluctuations in the rate. If you decide to trade during the release of news, then always place stop orders to minimize losses. Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes. And remember that for successful trading, you need to have a clear trading plan. Spontaneous trading decision based on the current market situation is an inherently losing strategy for an intraday trader.  

In the world of forex trading, it's essential to grasp the concepts of lots, mini lots, and micro lots before diving into the market. Let's break down these fundamental terms to provide a comprehensive understanding for both novice and experienced traders. What is a Lot? Forex trading involves currency pairs, such as EUR/USD. The value of a currency pair, say EUR/USD at 1.1500, implies that to hold 1 euro, you need to spend 1.15 dollars. Transactions involve buying one currency while selling the other. Lots are units used to measure the amount of money invested in a specific currency pair. One lot equals 100,000 units of the base currency. For instance, buying 100,000 euros against dollars is referred to as purchasing 1 lot of EUR/USD. It's crucial to note the existence of leverage in forex trading, allowing investors to trade more significant amounts than the funds available. With a 1:100 leverage, possessing only 1,000 USD enables trading with 100,000 USD. Mini Lots and Micro Lots While a standard lot is the basic trading unit, traders have the flexibility to open positions in smaller increments. This leads us to the concepts of mini lots and micro lots. Mini Lot: One-tenth of a standard lot, equal to 10,000 units of the base currency. Micro Lot: The smallest tradable amount at most brokers, constituting 1/100 of a lot or 1,000 units of the base currency. Especially for beginners, starting with micro lots is advisable before advancing to mini and standard lots. Lot in Trading Practice With this knowledge, let's delve into a practical example of buying and selling currencies. Consider the EUR/USD pair, assuming an upward trend. Opting to buy 1 lot of EUR/USD at a rate of 1.1505/1.1537 with a target at 1.1880 and a protective stop order at 1.1450, we can calculate the potential profit. In summary: EUR/USD: 1.1505/1.1537 Ask: 1.1537 Take Profit: 1.1880 Stop Loss: 1.1450 Calculating potential profit for 1 lot: (1.1880−1.1537)×10���=3430���(1.1880−1.1537)×10USD=3430USD For a mini lot, the profit would be 343 USD, and for a micro lot, it would be 34.30 USD. Considering potential loss in this example: (1.1537−1.1505)×10���=320���(1.1537−1.1505)×10USD=320USD The loss for a mini lot would be 32 USD, and for a micro lot, it would be 3.20 USD. As illustrated, trading volume significantly impacts both potential gains and losses. Beginning with smaller volumes allows traders to consider not only potential profits but also potential losses, fostering a prudent approach to forex trading.