Candle charts have existed for many years their formation helps shoppers orient in the direction of the forex trends
Strategy with candle charts
Choosing the right trading strategy is one of the main factors that affect the daily results of a trader, regardless of the market where he operates. Many people are able to spend a lot of time looking for an optimal trading option that they do not even end up doing. Therefore, it is important to allow everything we believe to offer some potential, sufficient testing in both directions.
Candle charts have existed for many years. Their formation helps shoppers orient in the direction of the business. One of the popular styles that we would like to share with you is the use of their wicks – so-called wicker wool trading (see individual pictures). Every candle and knot have always undergone some development. We use it to determine future results. Traders are based on price movements that can be read from the computer monitor.
If we want to delve deeper into this issue, we will use pictures from the MetaTrader 4 chart. These charts can be found in most forex traders. The methodology can be used to trade in any pair of currencies, but today we will focus on a few USDEUR. It is the most frequently traded couple in the world, which makes it very easy to take advantage of the day-to-day moves. There are many ways to look for opportunities to trade through specific candles. Popular candles are 5 minutes to help us find suitable stores. As soon as a candle wick is formed, two striking formations appear.
Basic rules of candle charts:
– Try to keep a whole day of the overall current trend.
– If the price gets to an integer, you need to use this moment as a so-called turn point (or reversal point). Later, we will continue to address this issue in more detail.
– Do not use every single witch that is displayed on the chart when trading.
– Before going into trading, focus on extreme movements with longer wicks.
– When we say to enter into trading, we mean a shop going in the opposite direction than the direction of the candle’s wick.
Of course, graphic representation will give more than a few words. In the figure below, we see a five-minute graphical display of the EURUSD status during trading in London. The picture below shows how the price consolidation was just under the pink line before it came under it. It is essential to recognize that this line is at the full figure of 1.2000. For whole numbers, an individual strategy usually works. In this particular case, a suitable strategy using candle knot can make it easier for us to make decisions.
The very fact that the price crosses this number suggests that resistance will be strong. In our case, the trend was slightly upward, but the overall market conditions were not clearly favorable. Here, it’s good to recall that the merchant should always keep in mind the trading time and at the same time watch the next up-to-date news. Since the price raises pressure, it can be seen that the 5-minute candle has a pronounced 8-pin wick. In this method, we try to find wicks with 7 or more pips. In our case, people behaved like sellers and got to the whole number, resulting in the emergence of resistance. The price came under severe pressure down, and people were trapped. The reason was too quick a sale of the euro. Holders of this currency went all in the same direction, causing the price to fall by almost 50 pips in less than two hours. This has created a perfect reverse formula containing several other elements working for our benefit.
How do we know when to enter the market?
This knowledge is usually done after a certain period of trading experience. At the entrance we will focus on one of two factors.
– We enter immediately after the candle with the knot has closed and set a strong mark above the wick or wick.
– Depending on the direction
– Near the next area of support or resistance this moment is to be determined for each individual business transaction.
– Other popular candle marketing methods include watching the upward trend of fresh candle prices. This phenomenon may occur later with the next candle or more candles. We will deal with the issue shortly.
How do we know when to leave the market?
The answer to this question is one of the most difficult at all. It all depends on the degree of risk we are willing to undertake. Sometimes it’s best to take profit and leave. At other times, however, we want to take some money out of the table and let the rest go our way. Choice of choice depends on every trader. We always paid the most to put money into the bank and get more profit from the rest. For example, if we trade with one standard lot, we could lose 0.6 lot and leave the rest with the set trailing stop. In the case of trading with binary options, the time to complete the transaction will be pre-set. We then only watch when it closes during our expiration period.
Another way to use candles with a long knot is waiting for further reactions. From past cases, it can be judged to some extent how a similar situation could develop in the future. For a nicely shaped wick in the early morning it can be assumed that it will later enter the game later in the day, but this is not the case in all cases. This means that the price will have to rise to the very top of the wick, which will bring (depending on the direction) a considerable amount of resistance or support.
In the second figure example, a turning point in the trading occurs by creating a distinctive wick during the day. When looking for similar business opportunities, you need to be very attentive. What is remarkable is how the price has created a giant five-minute knot of 20 pips. There was a drop of approximately 20 pips, depending on the point of entry into trading. Interesting is the subsequent wrinkle disruption after several hours. Here, every trader can choose whether to let the situation rise to the top or plunge, gradually with rising prices, to a more short-term business. Since the price violated this wick by only one pip, the setting of the track above the level of the original wick would remain unaffected.
It can be seen from the graph that after a certain period of peace, the price of the wick has dropped by about 30 pips. If we traded in this position and used the trailing stop, we could earn a nice pair of pips.
Trading with the use of candle wicks is of course more than it could be embedded in our article. However, our article provides at least a basic idea of the phenomena that are worth pursuing to conduct other types of trading in the future. It should be remembered that each currency pair is different and therefore it is important to optimize the individual candles before commencing trading. When trading a GBPUSD pair it pays to wait for a 12pip wick. The ability to fine-tune the situation correctly and the different nuances will be fine-tuned accordingly, with the length of practice and the amount of trading experience.
Not every knot is suitable for trading. Try to have more wits available than just the one that works for you. At the same time, keep an eye on all the bigger movements at the time of reduced traffic that the knot creates. These twists tend to copy the last movement and provide the full length of the original motion. You can then “scalp” or focus on more significant moves. It all depends on the risk the trader is willing to tolerate. It is true that not all the wicks will last. So back up the appropriate tracks for your potential protection.