Chart pattern trading strategies are one of the easiest ways to catch the largest market movement. Almost all the professional traders use chart pattern trading technique to secure huge profit from this market. But do think the rookie traders in the United Kingdom are making a huge profit by using the same strategy. The majority of the chart pattern traders loses money since they don’t know the proper way to execute the trade. If you follow some basic principle it won’t take much time to develop your skills. Just learn about the most common mistakes in chart pattern trading system and you will notice a dramatic improvement in your trading career.
Analyze the daily time frame
Instead of trading the market in the lower time frame, the elite class traders prefer to trade the higher time frame. Being a new chart pattern trader, you must look for potential signals in the daily and weekly time frame. If you spot trading signals in the lower time frame the chances are high that you will lose money. In the higher time frame, the quality of the trade setups is extremely good and you can easily secure decent profit. The higher time frame trading requires an extreme level of patience. The new traders in the Forex market don’t have such patience level. Thus, they trade the lower time frame and lose a big portion of their investment.
Wait for a clear breakout
The rookie traders are a little bit aggressive when it comes to currency trading business. Even after having access to the best CFD trading account they simply execute the trade before the breakout in any chart pattern. Though such an aggressive trading strategy might help them to make more money, in the long run, they are bound to lose. Follow the proper guideline to surviving in the trading industry. You have to wait for clear confirmation of the breakout and only then you will be able to execute high-quality trades. Stop thinking about making a quick profit from this market. Consider trading as your business and you will be able to make consistent profit at complex market conditions.
Look for price action confirmation signal
The conservative chart pattern traders are always one step ahead of the aggressive traders. They never enter into the market without having any valid price action confirmation signal. Sounds a little bit messy? Let’s make it clear. Assume the price of a certain asset has breached the neckline of the head and shoulder pattern. The aggressive traders will execute short immediately. On the contrary, the conservative traders will wait for a minor pull back and look for potential bearish price action signal near the neckline. Such approach dramatically improves their win rate and helps to make money in the long run.
Taking too much risk
The new traders often things they will make a huge profit by trading the major reversals. The moment you use the chart pattern, you need to understand the role of trend trading strategy in the Forex market. If you trade along with the market trend then there are low chances of losing money. But if you trade the major reversal pattern you should reduce the risk to 1% since you are trading against the major trend.
Being a new trader, you also need to analyze the fundamental variables of this market. Stop thinking about technical data only. By assessing the fundamental factors, you can easily avoid the false breakout in any market. Understanding the high impact news might be a little bit challenging at the initial stage but if you stick to your rules, it won’t take much time to develop your skills.
Trading the Forex market is a very challenging task. As a chart pattern trader, make sure you are not making the mistakes mentioned above. Always try to trade with low risk since the outcome of any trade is absolutely unpredictable.