The A-Z of Forex Trading: Part 4 (R to Z)

Filed under: Learn Forex Trading |

Continuing once more with our A-Z of forex trading, we begin this final instalment with the letter R, and we encounter some challenging letters in the final furlong.

 

R… is for Resistance. This is one of the most important concepts of forex trading. It marks significant areas in the market that have been respected in the past. You could visualize it as a ceiling that cannot be broken through.

 

S… is for Support. Support goes hand in hand with resistance, and it is a similar concept. The main difference is that price bounces off of support, and you can visualize it more as a floor or a foundation.

 

T… is for Trends. Trends are a very important element of trading. It tells us which way the market is moving and if we can ride a trend, we can make some very good profits. Trends can be identified either visually, or with the assistance of the slopes of some moving averages.

 

U… is for Up trends. Okay, okay. I’m running out of ideas here. Please see previous entry for information on trends. Up trends, of course, are trends that move up!

 

V… is for Volatility. Market volatility refers to how choppy the market is. Is it moving in vicious swings? Or are the movements relatively constricted? In volatile markets, stop losses are of paramount importance.

 

W… is for Wick. The wick of a candlestick is often important, especially in pin bars – which tells you that a market has moved one way before reversing and going in the opposite direction. The ends of the wicks show us the highs and lows of the session.

 

X… is for foreX. I know, I know. But really, xylophones are not relevant in the forex market.

 

Y… is for Your money. Never trade with money you cannot afford to lose – and never, ever, trade with money that is not yours (i.e. Do not borrow money to trade with!).

 

Z… is for Zzzz. If the markets get boring, do not trade for the sake of it. Have patience always, and the trade setups will eventually come to you.

 

 

Phew. Made it. Just about. That’s all for this week, and next week, I will be doing the Greek alphabet (only joking). Have a great weekend.

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