Using divergences to predict price action is an advanced trading technique, but the bottom line is that these are used to identify continuations or reversals in trends. In particular, divergence traders watch the lows and highs of price along with the lows and highs of the oscillator they are using. Below are four kinds of divergences in forex.
Successful traders will agree that keeping a trading journal is one of the crucial factors in achieving forex trading success. Not only does a good trading journal contain the trade plan or profit and loss components, it should be complete with risk management plans and psychological details. Here are the four important parts of a complete trade journal:
Now that you’ve learned the basic ways to make profits in the foreign exchange market, the next logical step is to use these fundamental and technical analysis skills to increase your trading profitability. Some ways of doing this include reading forex trading manuals or books, honing proper trade psychology, or working on forex signal systems. If you are short on resources though, you can make use of what you already have and, with a little more effort, work on your profitability.
Carry trade involves going long on a higher-yielding currency while shorting a lower-yielding one. In other words, to benefit from positive carry, you have to buy a currency with a higher interest rate against a currency with a lower interest rate. The interest rate differential will allow you to make profits if you hold on to the trade for at least a day even if price doesn’t move at all.
After learning the necessary skills in forex trading, such as fundamental and technical analysis, the next step is to improve your profitability. Some do this by reading forex books, working on trade psychology, or developing trade systems. However, there are some other ways to improve profitability without having to use additional resources. Here are some of them: