Everyone wants to make a huge profit from the Forex market. Some naive traders often become aggressive and start trading the high impact news with a big lot. At times they might get lucky but eventually, they are blowing up the trading account. Unlike the novice traders, the professional Aussie traders rely on chart pattern trading technique. By learning to trade the major chart patterns, you can easily ride the long term trend or major movement of the market. Though there are many chart patterns in the Forex market, we are going to high three important chart patterns. These are:
- Head and shoulder pattern
- Rectangle pattern
- Triangle pattern
Head and shoulder pattern
The head and shoulder pattern is a bearish reversal pattern. This means you will find this pattern at the end of an uptrend. If you spot this pattern you can short the pair and make a decent profit. But shorting the pair without having confirmation is very risky. The experienced Aussie traders prefer to trade the chart pattern based on price action confirmation signal. If you fail to learn price action trading strategy, then you should not try to trade the major reversal pattern. Though the trading technique is highly effective you still need to consider the risk factors. Never risk any amount which can’t afford to lose. If you do so, you will be under pressure and making consistent profit will be very hard.
Rectangle chart pattern
The rectangle chart pattern trading is much safer. Those who know about the nature of the Forex trading industry understand the importance of trend trading strategy. By using the rectangle chart pattern you can easily execute high-quality trades and make a decent profit from this market. But you should never execute any trade until you see a valid break of the support or resistance level. By using the aggressive trading strategy you might be able to make some big profit but in the long run, you are most likely to blow up the trading account. If you intend to make a decent profit from this market, make sure you learn to trade with managed risk.
Trading the triangle pattern requires an understanding of the higher time frame. If you trade it in the lower time frame, you are bound to lose money. Many retail traders often blow up the trading account since they don’t know the perfect way to trade the triangle pattern. You need to look for the triangle pattern in the daily or 4-hour time frame. Those who intend to trade the triangle pattern in the lower time frame are most likely to have a tough time in trading.
Use the demo account
You know the most relevant pattern to trade the forex market. Before you start trading the real market, you have to open a demo account with Saxo. Demo trade the market and try to understand how the chart pattern works. At the initial stage, you will lose money trades but this is normal. Losing, trades should be considered as blessings since you can learn many new things. Those who get bored with demo trading is never going to become a successful trader. You have to be patient with your trading performance, or else you are not going to make it in the Forex market. Develop your mentality and try to embrace the fact that losing trades is inevitable. Focus on high-risk reward trade setups since this will allow you to lose more trades.
Never become aggressive after losing a few trades. Try to stick to the basic rules of investment and read books on trading. The more you will learn the better you will become at chart pattern trading. If possible, get help from professional traders. Write the details of each strategy and follow proper guidelines in trading. Last but not least, never lose hope after losing a few trades.