To put it in simple terms, volatility is the amount a market can potentially move over a given time. Knowing how much a currency pair tends to move can help you set the correct stop loss levels and avoid being prematurely taken out of a trade on random fluctuations of price. For instance, if you are…
The first thing you’re going to learn is how to calculate pivot point levels. The pivot point and associated support and resistance levels are calculated by using the last trading session’s open, high, low, and close. Since forex is a 24-hour market, most forex traders use the New York closing time of 5:00 pm…
The previous lesson discussed how to set stop loss using a percentage-based amount of your account. A more sensible way to determine stops would be to base it on what the charts are saying. Since we’re trading the markets, we might as well base our stops on what the markets are showing us… Makes sense, right?…
What are pivot points? Professional forex traders and market makers use pivot points to identify potential support and resistance levels. Simply put, a pivot point and its support/resistance levels are areas at which the direction of price movement can possibly change. The reason why pivot points are so enticing? It’s because they are OBJECTIVE. Unlike some of the other…
Let’s start off with the most basic type of stop: the percentage-based stop loss. The percentage-based stop uses a predetermined portion of the trader’s account. For example, “2% of the account” is what a trader is willing to risk on a trade. The percentage risk can vary from trader to trader. More aggressive ones risk up…
Like we promised, here’s a neat little cheat sheet to help you remember all those chart patterns and what they are signaling. We’ve listed the basic classic chart patterns, when they are formed, what type of signal they give, and what the next likely price move may be. Check it out! CHART PATTERN FORMS DURING TYPE OF…
Managing and preserving your trading capital is your most important job as a trader. If you lose all of your trading capital, there is no way you can make back the lost amount, you’re out of the trading game. If you make pips, you got to be able to keep those pips and not give them back to…
That’s a whole lot of chart patterns we just taught you right there. We’re pretty tired so it’s time for us to take off and leave it to you from here… Just playin’! We ain’t leaving you till you’re ready! In this section, we’ll discuss a bit more about how to use these chart patterns to…
After journeying across the globe with Newbie Ned, and through some basic position sizing examples, you’re well on your way to becoming a competent risk manager. Now knowing how to set the correct position sizes is only a part of what it takes to become a pro at risk management. The other part is discipline. …
Let’s say you want to buy EUR/GBP and your broker account is denominated in USD. In this trade, you only want to risk USD $100. But you’re not trading US dollars, you are trading euros and pounds. How do you calculate your position size? In this lesson, we’ll teach you how to determine your position…