Everyone knows the chart pattern trading strategy is one of the best ways to make big profits in the Forex market. Spotting the major chart patterns in the higher time frame is easy. But in real life trading, things are hard since you need to work with precision. Being a fulltime trader, you have to understand the fact, trading is all about quality trade execution. A small mistake can cost you heavily.
Though there are many chart patterns, today we will discuss some amazing technique to trade the rectangle chart patterns. If you follow the tips in this article, you can easily make a decent profit from this market.
Analyze the daily time frame
Never try to spot the rectangle chart pattern in the lower time frame. Always analyze the data in the daily time frame since it will give you accurate signals of this market. Things might seem extremely boring but without having patience, you can’t expect to make money in the trading profession. When you analyze the daily time frame data, make sure you are trading the major pairs only. If you trade the cross pair, you have to use a wide stop loss.
Trade-in favor of the trend
The rookie traders in the Australia never consider the long term trend. But the rectangle chart pattern works best when you trade with the major trend. If you spot a breakout against the major trend, you should never execute any trade. It’s more like a trend continuation pattern. You need to find trades in favor of the trend to decreases the risk factors in trading. The experienced traders often use fundamental data to trade the major chart patterns. When it comes to rectangle chart patterns, you need high impact news to experience the major breakout.
Trade with a premium broker
You can’t become a successful trader by trading the market with the low-end broker. Make sure you have access to the SaxoTraderPro trading platform or else it will be really hard to analyze the market data. If you trade with a premium broker like Saxo, you can easily take advantage of their advanced tools. Most importantly you will get precise price feed which will increase your win rate. Some of you might think the high-end brokers are expensive. But if you manage to master the art of trading, a few good trades can easily recover the loss. So, find a reputed broker if you intend to trade the major chart patterns.
Learn price action trading
By using the price action confirmation signal you can easily trade the rectangle chart pattern with a very tight stops loss. Most of the time, the traders have to use wide stop loss to trade the chart patterns. This increases the associated risk factors in trading. But if you manage to learn the Japanese candlestick pattern trading strategy you can easily limit your risk exposure by trading the marker with reliable price action confirmation signal. Being a new trader you might get confused with the Japanese candlestick pattern but this is very normal. Use a demo account to develop your price action trading skills and you will get better at chart pattern trading.
Never risk more than 2%
Rectangle chart pattern trading strategy has a very high win rate. For this very reason, the rookie traders often increase the risk factors and lose a big portion of their investment. Being a rookie trader, you need to limit your risk exposure in every possible way.
At the initial stage, you should never risk more than1% of your account balance. Once you feel comfortable with chart pattern trading strategy, you can risk 2% of your account balance. But this doesn’t mean you will never lose trades. Be prepared to lose trades on a regular basis. Losing is nothing but a part of this trading profession.