A hard currency trading strategy is to get a business into the right place, a stop that is calculated correctly and setting a reasonable profit target that works from time to time.
Many new traders have set very ambitious profit targets in anticipation of the trade becoming a “big one” and hope that this will help them offset the amount of losses they have suffered.
However, a more effective currency trading strategy is to set reasonable profit targets every time, not expecting a homeowner, and to be satisfied with the small profits that generate equity in the account on a regular basis once the composite action is nicely started. Inside.
The Fibonacci tool is here.
This article captures how a trader knows how to use the Fibonacci tool which comes as a standard technical analysis tool in most charting software packages.
The basic retracement levels are 38, 50, 62 and 70 percent, two extension levels are commonly used – 1.27 and 1.62 percent.
The Importance of Five 127
This is our interest level 1.27.
Because the price regularly reaches the level of 1.27, or at least within a few pips of it. Prices are also often found around the 1.62 level but not nearly as high as the 1.27 level.
So if you trade with this trend, always have a safe currency trading strategy and the price returns to the 50 or 62 retracement level, the price of a very reasonable opportunity will reach the target of 1.27.
If the price returns to the retracement level again, it can’t go that far. If you trade from this retracement, you will want to take the first profit at the end of the swing as the price may not rise above this point to the level of 1.27 or 1.62.
Some traders only focus on this currency trading strategy when taking the trend:
- At Fib 50 retracement
- Out of the Phoebe 127 extension
Why is this sound currency trading strategy?
This is because the Fib 38 retracement level does not provide such a good risk reward ratio many times over. There is always the risk that the price will come back further and close your stop.
On the other hand, prices often fail to reach the 62 or 79 retracement level so traders are put on the sidelines as they fail to fill.
The 50 level is often reached so the trader has a good chance of fulfilling his order.
On the other hand, the 127 extension is not very ambitious. Outputs at 50A and 127 often gain somewhere between 25 and 40 pips. The risk reward ratio is satisfactory to stop a 20 to 25 pip.
How to use Fib 127
Here are a few more things to consider when using the Five127 extension:
See if this level matches other factors
Even with regard to the Fib 127 as a matter of taking profits, it is wise to trim a few pips of the limit order. So often the price reaches around Phoebe 127 and pulls back.
Yes it can touch it later but in the meantime the price goes backwards and you have to have mental stamina to be able to handle it.
Many traders would rather take a slightly lower profit and save two hours together with the risk of price consolidation so that they can lose the profit on their own.
A solid currency trading strategy develops over time. A key element is not being too ambitious. The Fib 127 extension level is a reasonable profit goal that you can use regularly to extract your wages from the Forex market!