Support and resistance are the essential things in currency pair trading. If you can find the perfect support and resistance level, making money in the online trading world will become extremely easy for you. Most of novice traders are placing trades based on the indicators reading. Indicators are nothing but helping tools. There are two basic types of indicators in the Forex market. The leading indicators will always give you early trading signals and you will always execute the low quality trade. On the contrary, the lagging indicators will give you late signals which means you can’t trade the real-time market data. For this reason, most of the successful traders in the United Kingdom don’t trade this market with indicators. They simply use the support and resistance level to place quality trades. However, trading the key levels of the market is really hard. You need to have solid knowledge of technical analysis or else you will lose money like 95% of traders. To further improve your trading knowledge and skills, you can look to use the different paper trading apps available to you, that can allow you to begin trading without using your hard-earned cash.
Use the daily time frame
When you draw the support and resistance level make sure you are using the daily time frame. Daily time frame trading is extremely popular among the professional trading community as it gives them a much more accurate signal. The rookie traders don’t have enough patience to trade the daily time frame thus they prefer lower time frame.In order to trade the lower time frame, you must learn multiple time frame analysis. Even after learning the multiple time frame analysis you will have to deal with lots of false trade setups. When you try to find the support and resistance level, make sure you have minimum two connecting points. Instead of considering the key levels as the solid number you need to consider it as a zone. But make sure you are not trading the against the market trend as it will increase your risk exposure.
Use the price action confirmation signal
Using the price action confirmation signals at the key support and resistance level is very profitable. The pro-UK traders always look for price action confirmation signals in their spread betting platforms. On the contrary, the aggressive trader’s places trade without any confirmation signal. You need to understand the fact, no support or resistance level will hold the price for sure. So if you don’t use the price action confirmation signal chances are very high you might have to lose a huge amount of money. Some retail traders say price action trading is very hard. But if you focus on the key price action signals everything will become extremely easy for you. If need takes help from the professional traders to master price action trading system. Though the system is extremely profitable yet you should never risk more than 2% of your account capital.
Use the 100 and 200 days SMA
100 and 200 days SMA is widely used by the professional traders. It allows the traders to trade the dynamic support and resistance level with the high level of accuracy. But when you are trading the dynamic support and resistance level make sure you have a complete knowledge of price action trading strategy. Without using the price action confirmation signal it will be nearly impossible for you to deal with your trading loss. At times, you might have to face a series of losing trades even after doing the precise market analysis. This is very normal. No one can predict the price movement with 100 % accuracy. For this reason, you need to learn trade management so that you don’t have to lose a big sum of money in any trade.
If you can follow these three simple rules you can easily become a successful trader. You don’t need a complex trading system to make a profit from this market. Try to keep things simple and trade this market with discipline.