There are many traders in the forex market who start forex trading in order to get rich. Those who are making money by trading the financial instrument in the world have mastered the true art of forex trading. If you want to make money like the professional trader then you need to have a clear understanding of the forex market. Most of the rookie traders in the forex market fail to make money since they trade different financial assets in the market without having any strong trading foundation. There is a strong tendency in the new traders that they like to buy the market in the deep and sell the top. This type of trading strategy is extremely dangerous and most of the professional traders call it as the top and bottom trading in the market. Trading the tops and bottom in the forex market can be extremely difficult but if you know the perfect trading strategy then you can also make a decent profit by trading the tops and bottoms in the market. In this article, we will discuss how we can trade the tops and bottoms of the market like the professional traders in the forex market.
Key swing in the market: If you want to trade the tops and bottoms of the market then you need to have a strong knowledge of the key swing in the market. Most of the novice traders fail in tops and bottom trading since they don’t know how to identify the key swing in the market. The swing is the highest price in the market and the swing low is the lowest price in the market before it starts reversal. Professional traders also consider these key swing in the market as potential key support and resistance zone. So if you want to trade the bottom and top of the market then make sure that the price is trading near the key swing high or low in the market. And always use very tight stop loss while trading the reversal in the market. Trading against the trend is extremely dangerous and since you are taking trade against the trend you should trade with very low risk in the market. And if your trade hits the potential stop loss in the market don’t take any trade against the trend since the market has already broken the high or low in the market.
Use price action signal: Trading the reversal in the forex market can be extremely difficult if you are relatively new in forex trading, Most of the novice traders use tons of indicators to trade the reversal in the market. They take the thing that by using many different kinds of indicators in the forex market they will be able to pin out the perfect reversal in the market. But in reality, indicators will never make you successful in forex trading. Indicators are of two types, leading and lagging. That means if you trade the financial instrument by using the indicators then you will have either leading signal or lagging signal in the market.SO how can we trade the reversal in the market? The answer is simple. In order to trade the reversal in the market perfectly, you need to know how price action trading strategy. The price action trading strategy is based on the raw price data of the market. Professional traders use the different candlestick pattern formation in the market to trade high probability trades in the market. Most when you trade the reversal in the market wait for price action setup at the key swing levels in the market. To be honest, you can only make a consistent profit by trading the tops and bottoms of the market if you follow the proper price action trading strategy in the market.
Use three major types of analysis: If you truly want to become a professional trader in the forex industry then you need to trade the market with the help of three major types of analysis in the market. Most of the new traders trade the tops and bottoms of the market using the technical analysis only. But in order to trade the tops and bottoms, you need to do the fundamental analysis along the sentiment analysis. Fundamental analysis will help you to gauge the economic performance of a certain currency in contrast to another whereas the sentiment analysis will give you a general overview of the market sentiment. Sentiment analysis is extremely important tin trend reversal trading. In the eyes of trained professional sentiment analysis is considered to be the most powerful price driving catalysis in the market. For instance, if the technical and fundamental analysis say that the market will hold a certain key support level then you will execute your buy order. But after executing your trade you saw that the market rapidly broke the support level.So what was your mistake? The answer to this question is also very simple. You just have ignored the market sentiment while taking the trade.
Summary: Trading the tops and bottoms of the market can be extremely difficult especially if you don’t have a very strong trading knowledge. Those who are trading the forex market for a long period of time also trade the reversal in the market. But in order to trade the reversal in the market, you need to know the price action trading strategy very well. And never trade the reversal unless you know what you are doing. And always make sure that you execute your orders in the market with proper risk management factors.