#What is Trading- Basics#
Copied & Edited from my website wagoninvestments.com
I will try to be as short here as possible, the purpose of this article is you to know what is trading, and what are the best tools you should know before entering and putting your hard earned money
Please note, I have not gone into details here as it would be overwhelming for a new trader.
Trading is to simply two opposing parties buyers (Bulls) and sellers(Bears) trying to speculate on a price of a market it could be any market like cryptos, commodities forex, bonds or stocks.
The aim of an informed the trader is to buy low and sell high.
Ten years down the line i was a new trader learning all internet had to provide, I devoted all my time in the markets and left my day job.
The best thing I found in internet according to me that time was babypips.com, I learnt everything from there indicators was very easy and catchy!
Believe me there are more than 50 plus out there which work sometimes, I learnt almost all of them from babypips.com and other sources, searching you tube channels, and got even more confused. Everything looked perfect when i saw the past data, but almost seldom worked on live markets.
Patience being not my strongest virtue, I either closed the trades earlier, missed them completely or was stopped out.
Within 2 years I had understood, that I need to switch to something as what I had learnt was working sometimes, and most of the times not.
Fibonacci, Support and Resistance, Patterns, Elliot Waves, Moving averages and Candle sticks were the best I came closest to being called a trader, so it is of paramount importance to aspiring traders to know these, to get a grasp of the basics.
You will need a platform to trade there are countless platforms most recognizable being Metatrader version 4 & 5, most of the brokers use Metatrader. Many have created there own versions also.
A financial broker is the entity that adds you up with the banks, so the retail traders can trade too, the brokers give the retail traders huge leverages(some could be up to 2000) to your trading account so you can trade more lots( lots are just a unit of the market you want to trade like EUR USD or cryptos.
In European Union countries you can trade with 30 times the money you have deposited with the broker, it is the way the regulators try to safeguard the interest of the traders. FCA for UK and Cysec for Cyprus are two regulators, there are different for different countries.
Remember leverage is a two sided sword as if you are an expert trader, and it is your day with 500 to 2000 leverage, you can earn very good as you can trade more pairs, opposite is also the truth if it is not your day and you are not an informed trader, and you decide to trade your money can disappear in no time.
Some brokers will be regulated some will not, I have traded with both but can confidently say that it depends on the brokers owner’s honesty.
I have seen regulated brokers also cheating the clients.
Basics
So lets start, with the basics buy low sell high this is what all the gurus says, yes thank you, but how do I know is it the real high or low?
If you see the charts in any platform of your choice, you will think yes seeing the past data the price has reached the previous peak so certainly this is the top and you would trigger a sell, only to see the price breaching the top again and the rally continuing and your dream of catching the top is busted and if you have not used a stop loss you will be a very sad person.
- "Fibonacci Retracements "
This is where Fibonacci comes in the picture you go to daily chart and put the Fibonacci in mt4(Insert, Fibonacci and retracement from previous top to previous bottom) three levels pop up 23.8 percent 38.2 and 68.2, these levels or the lines are one of your guess that you can say markets can reverse from here.
2."Support and Resistance Price Lines"
After the Fibs you need to draw support and resistance lines from the past data. Remember previous support price levels become resistance generally and previous resistance level become support levels.
if there is a conjunction of fibs and support resistance lines at a price level this is an added confirmation of reversal of trend.
Support is simply when the price of a market is falling and you see that the price was not able to go down more from one price level example 9.20 for EUR SGD(check the chart yourself) for long time this is the support, if you think the price will go up now from here.
However if the price breaks this level and the price dips to 6 and starts going up and you buy at 6 and the market reaches 9.20 around this will be your resistance.
3."Patterns"
Now we speak about patterns, traders have identified patterns from there experience they are visually defined:
Reversal Patterns, Continuation and Bilateral Patterns:-
4."Moving Averages" : Moving average is a technical method that is used to measure data and time series.
The best thing is you can input the moving averages in MT4.
Go to Insert Indicators, Trend and Moving Averages Insert in period 50 MA Method Exponential and customize the colors which you prefer.
Similarly input one more average 200 and wallah see the effects in weekly markets.
For going to details how it is refer babypips.com, but when the MT4 gives it for free I don't see a need.
5."Elliot Waves" The most important points of Elliot waves is that it is a technical indicator/theory which gives a point of psychological behavior of traders:
Elliot waves are categorized as 5 waves up and 3 ways down.
The first wave has 5 sub waves inside.
The second wave is a retracement.
The Third wave is with the trend that is like the first wave but the third wave is the most strongest and this is where you want to be.
The fourth wave is generally consolidation.
The fifth and the last wave is like the first wave.
Visual Explanation:
After this there are 3 waves downwards again the second being the retracement. To go to details you can contact us i will send you the best books to your inbox.
6."Candlesticks" This is a theory invented by a Japanese rice trader ,in the 18th century.
it is just candles like the monthly candle, hourly candle when used with support and resistance the candles can giveaway the psychology of the traders.
There are many candles the most important are visually described here:
Take your time in reading and understanding the article, I have tried my best to make you understand what really works remember these are the basics, if you want to know more in details you can contact me visit http://wagoninvestments.com
Thank you happy learning!
*Risk Disclaimer: All investments are subject to risk, you can loose your money.
Never ever Invest more funds that you can afford to loose.
Copied from my website: wagoninvestments.com
Kindly excuse me if I have done something wrong here with , this is my first post here.