Maybe this just comes with years of experience or some live forex news wire that spits out minute by minute updates the second they happen, but how do people know when something is low or high? Look at the following images for example.
Please excuse to crude paint illustration, my point being is at any given point in time the price is going to look like it’s at a low or a high so it’s a complete guess. I mean look at the first major drop on the 01/08/16 it takes a nice dive so you think it’s low so you buy… Only for it to go even lower at a few days later.
So I have to ask, do traders set limits for themselves, as in I’m going to buy now and sell when it gains 20pips rather than try to wait until it drops 200pips or what?
Here is another graph dating back a few more weeks and guess what? Lows just get lower, there are other graphs where highs just get higher also.
Look at how many times it appears that the price is low. So how do you KNOW that it’s low? I wonder how many people bought at 3rd circle on the graph, only for it to plummet even further.
Basically what I’m trying to say is when you think it’s at it’s highest, it can easily go higher and when you think it’s at it’s lowest, it can easier go lower. So how do people KNOW when high is high, and when low is low?
saying a price is high or low is something bit different then what you asked here.
When a expert says "the price is low/cheapt/ he is talking in different imetables. Compare euro vs. usd. the last time it was 1,09 was 2002 when the euro was released. so compared to the last two decades at the moment the price is “low/cheap” but that does not mean that you have a perfect spot to enter. the price still can go lower, or turn right now. the spot to enter is something completely different again which you have to learn by practice.
the price right now is low, but it can still go lower.
now if you were someoe with a big wallet, youd trade it this way:
invest 10million right now on leverag 1:1 - wait 2-3 years till it comes back to 70/80/90 and you made 30 millions in 3 years.
If it goes down to $20/barrel - so what? it for sure wont be worth nothing - you just stick in your trade knowing it will come back sooner or later.
Calculate: 0m inveted, dropping further 10$ you loose 3 million (if you exit the trade but a pro wont), it goes up to 80 you made 60million. all you had to do is have a 1:1 leverage and wait wait wait, no hurries.
its a sure bet, as oil can not be “worthless” it is very easy to understand that it is cheap and it will be worth more sooner or later. a secure bet.
Daytraders approach:
you have 5000
you invest 300 leverage of 200:
it moves 1 $ against you: youre wiped out. - you lost all your margin.
Well if someone was to sell you a ford focus for £1.2million, you’d know it was high and not to buy it… but if someone sold you a ferrari for £800 you’d know it was cheap and you’d buy it…
So how do you know when a currency is worth buying or selling?
OK so what you’re basically saying is the people who REALLY make money in this industry and those who trade on a very lengthy timescale, of several months, or even years?
is the eurozone economy broke? or is it in a worse state then it was 2002? compared to USA is it worse then 2002 or better?
easy fundamentals which will tell you that the euro is at a cheap price right now. add to it other fundamentals like that the QE programm of the ECB is priced in etc etc theres no use in me talking my mouth dry here. it is your duty to learn those things and understand them, if i explain you now why i think the euro is cheap atm it wont help you in making money.
generally said, learning trading will make you be able to answare your own question by yourself sooner or later.
I’m not asking for advice… On small time scales of hours, days and perhaps weeks the price is always going up and down all over the place but the price doesn’t always go back up to the price you may have bought it for right?
check this link: School of Pipsology | Learn Forex Trading it wil give you many answares ont how and after you worked your way through and still have questions you can ask as many as you want.
TurboNero, in that link you gave me they show lots of graphs and candlestick patterns etc but what timescale are they using? Or does it not matter? Because when I’m comparing a 1 minute graph to a 1 hour graph they look very different. The 1 minute graph tends to be very erratic and can chop and change in a heart beat.
Assuming you wanted to go in and our of a trade or two in 24 hours, would you use the 1 hour graphs for your patterns or a 30 minute graph or what?
The 5 minute and hourly charts are popular. The 1 minute may give more opportunities, but you have to stick around to use them. If you trade manually I would suggest to work with 5 minute charts, and even better, higher timeframes.
The strategies often work on multiple timeframes, but that is not guaranteed.
Toekan is right, you mainly have to find your own comfort zone. there are people earning money beeing in a trade for minutes and there are people earning money beeing in trades for month. the technical background is pretty much the same, the chart is the chart if u look at it in 5 minutes or 2 hours intervals its still a chart.
you want to do scalping? daytrading? swingtrading? its up to you what stile trading u want then youll know what time frames u must use.
Hello Everyone,
First of all to check the highs and lows there is a very common term that most of the traders use is support and resistance. In this lucrative world of forex, you will find there are many technical traders who put their trades on the basis of support and resistance. Resistance is the price level at which selling is thought to be strong enough to prevent the price from rising further and support act as a floor by preventing the price of an asset from being pushed downward. There are few gestures that should be considered while checking for highs and lows.
Like you can look for gap up and gap down opening
Check for trend lines
Round numbers
Moving Averages
You can also use some indicators like Fibonacci retracement and extension to check for your highs and lows.
But always keep in mind that support and resistance keeps breaking, what matters the most is the fundamentals. So put your trade looking both into fundamentals and technicals.
And secondly there are no such charts that are popular or not popular. Like TurbiNero said it depends on what type of trader you are. Like scalper follows a tick chart or 1 min chart, momentum traders exceed up to 15mins chart. What you have to check here is if you are following any indictor on which time frame it is following correctly. Like MACD for Gold in 15mins chart might show correct results but not in 1hr charts.
Maybe tis is most dificulties in forex trading analysis especialy for beginner trader because might they still often rush in trading, in my view if we look on history movement, hence we will get on peak candle and bottom candle which this is as area support and resistance and usually on support area this having possibility as low price while on resitance area will possibility on high price.
