In today forex faq, we have a question about forex support and resistance as well as the right way to enter a trade from our fellow traders.
Below is the question:
Question 1: Hi sir. How to find the strength of trend? Because when I buy the market goes down. when I sell the market goes up despite after I read the chart and make the decision. I personally used MACD indicator, Stochatic indicator and Moving average.
Question 2: Sir how to use effectively use to forex support and residence level to entry and exiting
First I will like to thank the above traders to send me this question as this is one of the most common situation faced by new traders. In fact, I do have this problem when I first started trading a few years back. Therefore I will like to share my view about this problem and how you can overcome it.
The problem does not lies in the determination of the strength of the trend. It has to do with your entry and exit. Even if you are able to identify that the market is moving in a very strong down trend, you can still get stopped out even when you go SHORT.
This is because the price can still move up as it retraces before it started to go in the direction of the trend. Therefore the key is still knowing when to enter your position.
One of the best way to help you to identify when you should enter your position is using forex support and resistance. There are times when you enter a SHORT trade without knowing that it has in fact hit a support level. This usually explains why the market moves up after you sell.
In fact, I have written an article before in this blog sharing with you the various forex support and resistance indicators and I strongly suggest you guys should read that post.
After you are able to identify the various forex support and resistance levels, you will be able to avoid entering a LONG position when the price is approaching a resistance or entering a SHORT position when the price is approaching a support level.
One of the best way to enter a trade is first determine the direction of the trend and then enter a trade in the direction of the trend when the price hits a support or resistance.
For example: If the current trend is DOWN, you should wait for the price to move up till it hits a major resistance before you enter a SHORT trade.
This will greatly increase your chance of winning in a trade and that is what a real trader should always do. I hope that I have answered the 2 questions above and if you guys have anything to share, do give your opinion below as it will be valuable for other readers in this website.