Raghee Horner, an expert in trading futures, options, forex and stocks, tells traders 3 important preparations for better trading.
- View the economic calendar
Before trading, make sure you know not only the economic calendar and headlines for the day, but also what happens when I leave the trading computer. Pay attention to the release of economic data, especially the previous trading day, the current trading day and the future trend of the market, and comprehensively review this week’s data.
Check out the headlines on sites like Forex Factory and Bloomberg to see what traders are reacting to to discount the market. This allows me to assess the potential risk of the session, when volatility is most likely to increase, and what time frame I would consider in this environment.
- Analyze price movement bias
The choice of time frame is largely determined by identifying directional biases in the market. No matter what symbol you trade, the daily time frame is the primary consideration, not necessarily the trade, but knowing what the dominant psychology of the market is. This is done by using the 34EMA Wave and GRaB candles.
By understanding the sentiment, momentum, and trend of the market, you are actually determining whether it is bulls, bears, or if no one is manipulating the market. The daily trend time frame has what I call a “trend direction bias”, which is the best type of market you need to focus on because there is a clear, dominant psychology.
You want to be directional and really shouldn’t care if it’s a bull or bear market. If there is a trend direction bias, enter a trade where the trend is valid on all intraday time frames, of course, on the daily itself. However, it is best to limit countertrend entries to short-term time frames, such as 5 minutes, 15 minutes, and 30 minutes. Following the trend is always the path of least resistance, so it is best to trade a symbol that is trending every day.
- Measure risk per trade
Another aspect of trading is cost and pip changes. Many traders don’t consider transaction costs until they understand the spread, which changes slightly during each major trading session. The cost per trade also includes rollovers, if applicable to your trading account, and depends on how long you hold the position.
Longer timeframes are not greatly affected by short-term entry and may be reconsidered if the spread movement is not suitable for trading due to the spread. Point movement ranges are also part of the same discussion.
Whether we’re talking about stocks, futures contracts or forex currency pairs, every market has its own rhythm. For Forex, I know exactly what the expected range of volatility is for each currency pair I trade every hour of the day. it is necessary.
Consider this: If traders were to refer to the time between 8:00am and noon EST and use it as a measure of the point change from 8:00pm to midnight, their expectations would be significantly off the mark, as Europe , UK and US overlap can be (sometimes) twice as large as Asian sessions.
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