Chart pattern trading strategy is a very effective way to secure big movements in the market. The novice traders are always trying to ride the newly formed trend and looking for the big market movements to earn a huge amount of money. Most of the time, they are using the news factors to execute the trade. But this not the proper way by which the elite UK traders are taking the trades. They are using the major chart pattern to find the profitable trade signals.
Learning about the chart pattern trading strategy is a very complex task. However, if you follow the guidelines mentioned in this article, you may expect to master this technique within a few months.
Trade in the major currency pairs
People always love to make big money. Due to intense volatility in the cross-currency pairs, people often think they can make a big amount of money by taking the trades in the synthetic currency pairs. By doing so, they lose a big portion of their investment. While learning the basics of the chart pattern trading strategy, retail traders should look for the trade signals in the major currency pairs. As the price movement in the major currency pairs is much more stable it provides better profit-taking opportunities. Though you will feel bored, it is by far the most efficient way to learn the chart pattern trading technique.
Move to the higher time frame
You should never look for the major chart pattern in the lower time frame. Those who are looking for the chart pattern in the lower time frame are making big mistakes most of the time. To keep pace with the modern dynamics of the market, professional traders suggest trading in a higher time frame. And to ensure quality trade execution, you also need to find a great trading platform. Visit the site of Saxo and download their demo platform. Use the paper trading account to find reliable chart patterns in the higher time frame. Once you start to learn about the basics of the chart pattern, you will understand the importance of a higher time frame trading strategy.
Look for long term goals
Many novice traders use the major chart pattern to scalp the market. But chart pattern trading strategy is not designed for the scalpers. It is more like a position trading strategy so you should be prepared to hold into the trades for days. However, if you wish to use the chart pattern trading technique in the H1 time frame, you can trade like an intraday trader. Still, the profit factor should be high compared to the risked amount. Try to maintain a 1:5 risk to reward ratio while using the major chart patterns in the market. Once you become comfortable with the chart pattern trading strategy, you will become more efficient with the trade execution process.
Learn to accept the losses
After learning everything about the chart pattern trading technique, you might think you will never lose money. But this is very wrong. Everyone has to face losing trades even though they might use 100 period SMA to set the stop loss. To be on the safe side of the investment industry, a trader should always trade with low risk. Never risk more than 2% of the account balance as it will make things worse. Try to trade with the key trend thus avoid taking the trades based on reversal chart patterns. But once you become confident with the trend continuation pattern, you may look for the reversal chart pattern trading technique. But in that case, you should sync yourself with the global economic news, or else you will lose most of the time. And never increase any amount which you can’t afford to lose. If you risk too much in the trades, you are going to blow up the trading account. So, follow the core rules of trading and trade with low risk.