|Learn Technical Analysis|
|The Technical Analysis Principles are summarized in the following items:|
|1. What is a Market Trend?|
|A trend is the direction in which prices are moving. Trends may be Upward, Downward or Neutral.|
|2. Different Types of Trends|
|There are three types of trends: Upward, Downward and Neutral (also known as sideways).|
|3. Classification of Trends|
|Trends are classified in: short, middle and long term trends. Within each trend we may establish other minor trends, e.g. in a long term trend we may find different tranches where there are short-term upward trends and short-term downward trends.|
|4. Trend Lines|
|A trend line is the simplest and most important tool used by traders.How do we draw an upward trend line? We must find at least two minimums on the chart where the second minimum must be higher than the first one. A minimum is the lowest price attained during a countertrend.|
|5. Information about Trend Lines|
|What is a trend line used for?
To identify possible changes in a currency’s trend.
Possible Buy: a limit of the support line may be used as a buy area.
Temporary Trend Line Transfers: close to or below the trend line.
|6. Channel Lines|
|Channel Lines occur when prices move between two parallel trends, thus forming a Channel. There are Bullish, Bearish and Neutral Channels.If a price touches the minimal trend, this may be used as a buy area and if a price touches the maximum trend, this may be used as a sale area.|
|7. Price Support Levels|
|The support level is a price area which is strong enough so that it is not possible to consider prices to drop even more.|
|8. Find Price Resistance Levels|
|A resistance establishes a price level where the selling interest is imposed upon the buying interest. Prices are held and drop.|
|9. 50%, 33% and 66% retreats|
|Prices may retreat in a portion or percentage of the current trend, before returning to the original direction. Countertrend movements tend to retreat a predictable percentage. The usual situation is a 50% retreat in the movement, although there are also 33% and 66% retreats.|
|10. Technical Analysis Application|
|Currency charts are a tool that may be used at intraday intervals (5, 15, 30 minutes), on an hourly, weekly or monthly basis.If the trader adopts short positions it is convenient that he analyzes intraday charts (5, 15, 30 minutes). If he takes several-day positions, it shall be convenient for him to analyze daily charts with 1.4 hour intervals or daily charts. On a weekly or monthly chart we may analyze long-term trends. Long-term charts confer technical operators a larger reference margin for their trades.|
Every trader may be successful if he operates strategically bearing in mind the following principles:
|Trade with discipline|
|Always remember to have an already fixed plan at the time of trading. Define the currency contract you are going to trade, the amount in lots you are going to buy or sell, the price and the limit and stop you will impose upon your trades.Analyze charts. Test your abilities bearing in mind all this information. Access free charts by clicking here.|
|Maximize profits and minimize losses|
|The use of an adequate strategy will maximize your profits; bear in mind that you will not make a profit in all your trades but the important thing is that you make a profit in most of them. Use limit and stops in your trades, be cautious, let your profits flow and reduce your losses. Be cautious with your level of exposure on the forex market.|
|Avoid making the most common mistakes|
|Do not operate against the trend, which is a common feature among some traders.
Remember that there are two forms of Trading; see the technical analysis and fundamental analysis sections.Make full use of your tools; at AFM you will find the necessary tools to trade in the forex market: news, charts, economic analysis and the latest market comments.Manage your risk using stop and limit orders. Make a summary of all your trades and observe which has been the most successful strategy you have applied to improve your performance