Forex Trader Safety Checklist
The new Forex trader can easily be tempted into what seems to be an attractive trade. Beware! The 'perfect trade' can very quickly turn into a loser. Perhaps you will relate to this familiar scenario experienced by many a Forex trader:
Price has been channeling for a couple of hours, in consolidation.
You place an entry order to get taken in at the top or bottom of the channel.
Almost as soon as your trade is activated you notice it is down 10 pips. Minutes later that has gone to 15 pips. Before you can blink, your trade is out, having hit your stop loss.
Price hardly moved for hours but as soon as you got into a trade you were taken out within minutes for a loss leaving you bewildered and muttering, "What happened?"
A new Forex trader can avoid a lot of heartache by developing a Safetrading Checklist. This will help with gaining experience so that good trading methods become habitual.
Just having a procedure in place that has to be executed before pulling the trigger on a trade can prevent the Forex trader from quickly entering a trade just because there are some sudden movements on the screen and the trader is worried about missing an opportunity.
This may of course delay things as you go through your checklist and you may end up missing an opportunity while you make sure all the criteria are met. But better to miss the occasional opportunity than regularly go into trades in a rush and regret it.
For a very cautious approach to trading the newer Forex trader can use this Safetrading Checklist to determine whether the potential trade setup is likely to be high probability or low probability.
Safetrading Checklist
Avoid Long Trades If:
MACD on either the 4 hour, 1 hour or 15 minute time frames are showing negative divergence.
The 4 hour and 1 hour charts show MACD pointing down.
Price is well above the daily central pivot point.
With the 200 EMA plotted on the 4 hour, 1 hour and 15 minutes charts, price is below the 200 EMA on the two higher time frames but above it on the 15 minute chart. In other words price is bucking the trend.
Price is above a Fibonacci 50, 62, or 79 retracement (calculated from the last high and low)
Your stop is not below multiple layers of support such as a significant previous high or low, pivot point, or Fibonacci level.
Avoid Short Trades If:
The 4 hour, 1 hour or 15 minutes charts are showing positive divergence on the MACD indicator.
MACD is pointing up on the one hour or four hour charts.
Price is well below the Central Pivot Point for the day.
With the 200 EMA plotted on the 4 hour, 1 hour and 15 minutes charts, price is above the 200 EMA on the two higher time frames but below it on the 15 minute chart. In other words price is bucking the trend.
Price is below a Fibonacci 50, 62, or 79 retracement (calculated from the last high and low)
Your stop is not above multiple layers of resistance such as a significant previous high or low, pivot point, or Fibonacci level.
The Most Important Lesson Of All
Implementing this Safetrading Checklist strategy may reduce the number of trades the Forex trader participates in. However, here an important lesson is learned - patience! Waiting for a high probability setup can make many demands on a Forex trader's mental resources and emotional strength.
And this is probably one of the greatest lessons the Forex trader will have to learn. A Safetrading Checklist like the one above can get a trader to just slow down, and give thorough consideration to the technical indicators on the screen. At this point, the new Forex trader can start to make progress. - 23218
Price has been channeling for a couple of hours, in consolidation.
You place an entry order to get taken in at the top or bottom of the channel.
Almost as soon as your trade is activated you notice it is down 10 pips. Minutes later that has gone to 15 pips. Before you can blink, your trade is out, having hit your stop loss.
Price hardly moved for hours but as soon as you got into a trade you were taken out within minutes for a loss leaving you bewildered and muttering, "What happened?"
A new Forex trader can avoid a lot of heartache by developing a Safetrading Checklist. This will help with gaining experience so that good trading methods become habitual.
Just having a procedure in place that has to be executed before pulling the trigger on a trade can prevent the Forex trader from quickly entering a trade just because there are some sudden movements on the screen and the trader is worried about missing an opportunity.
This may of course delay things as you go through your checklist and you may end up missing an opportunity while you make sure all the criteria are met. But better to miss the occasional opportunity than regularly go into trades in a rush and regret it.
For a very cautious approach to trading the newer Forex trader can use this Safetrading Checklist to determine whether the potential trade setup is likely to be high probability or low probability.
Safetrading Checklist
Avoid Long Trades If:
MACD on either the 4 hour, 1 hour or 15 minute time frames are showing negative divergence.
The 4 hour and 1 hour charts show MACD pointing down.
Price is well above the daily central pivot point.
With the 200 EMA plotted on the 4 hour, 1 hour and 15 minutes charts, price is below the 200 EMA on the two higher time frames but above it on the 15 minute chart. In other words price is bucking the trend.
Price is above a Fibonacci 50, 62, or 79 retracement (calculated from the last high and low)
Your stop is not below multiple layers of support such as a significant previous high or low, pivot point, or Fibonacci level.
Avoid Short Trades If:
The 4 hour, 1 hour or 15 minutes charts are showing positive divergence on the MACD indicator.
MACD is pointing up on the one hour or four hour charts.
Price is well below the Central Pivot Point for the day.
With the 200 EMA plotted on the 4 hour, 1 hour and 15 minutes charts, price is above the 200 EMA on the two higher time frames but below it on the 15 minute chart. In other words price is bucking the trend.
Price is below a Fibonacci 50, 62, or 79 retracement (calculated from the last high and low)
Your stop is not above multiple layers of resistance such as a significant previous high or low, pivot point, or Fibonacci level.
The Most Important Lesson Of All
Implementing this Safetrading Checklist strategy may reduce the number of trades the Forex trader participates in. However, here an important lesson is learned - patience! Waiting for a high probability setup can make many demands on a Forex trader's mental resources and emotional strength.
And this is probably one of the greatest lessons the Forex trader will have to learn. A Safetrading Checklist like the one above can get a trader to just slow down, and give thorough consideration to the technical indicators on the screen. At this point, the new Forex trader can start to make progress. - 23218
About the Author:
Master the MACD Signal for safe trading. Click here: MACD Signal Learn to use candles! Use the free Candlestick Pattern Instant Recognition Library here: Candlestick Pattern
posted by X - Men @ 3:49 AM
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