Anyone can become a retail trader by opening a trading account. But when it comes to securing a consistent profit, very few traders can do so. The majority of retail traders don’t even have the proper knowledge to trade the market. They don’t even know about the basic terms used by the pro traders. To become good at trading, you must have strong analytical knowledge and have a strong idea of the market basics.
In this article, we are going to give a clear explanation of some of the most basic terms used by retail traders. Read this article through as it improves your basic knowledge and makes you a better trader.
Support and resistance level
Support is a zone in the asset in which the price of an asset tends to gain bullish momentum. On the contrary, the price of an asset tends to get bearish power at the critical resistance level. As a trader, you should be looking for the buying opportunity at the major support level and the selling opportunity at the critical resistance level. While drawing the support and resistance level, focus on the higher time frame. If you use the lower time frame, you will never find a reliable trading zone.
Trend lines
The market always moves in a specific pattern. The trend is nothing but the prolonged movement of the asset in a particular direction. Usually, traders tend to take the trades in favour of the prevailing trend as it helps them to reduce the risk exposure in the trading profession. With the help of simple trend line tools, you can easily find the direction of the trend. Systematically connect the highs and lows to find the direction of the trend.
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Trading account
If you ask the new traders, what is Forex trading, the chances are high that they won’t be able to give you the exact answer. Trading is nothing but buying or selling assets in the global market. If you manage to identify the direction of the trend properly, you are going to make money. The trades are being executed in the trading account with the help of an online trading platform. Most of the high-end brokers leverage their trading account to retail traders so that they can take high-quality trades without having any major trouble. However, while using the leverage, you should be extremely careful with your trade execution process or else you might lose money most of the time.
Indicators
The majority of novice traders love to use the indicators. Indicators are nothing but a simple tool that allows retail traders to find the quality of the trade signals. If you want, you can also use specific indicators as the support and resistance level. For instance, if you install the Bollinger band in your chart, the upper band is going to act as a resistance level and the lower band will act as a strong support level. Based on that, you can also take high-quality trades in the market.
Chart pattern
After learning the basics of trading, you will learn a lot about different kinds of trading strategies. During the learning stage, you will find interesting topics on chart patterns. If you want to secure big profits in the market, you can use these patterns in a higher time frame. However, you need to learn about the basic patterns and use them in the demo account. Unless you feel confident with your demo trading performance, you should never trade the real market based on the chart pattern trading technique.
If possible use the price action confirmation signals to improve your trading efficiency. The price action trading method is based on candlestick patterns and it allows retail traders to make a decent profit without having much trouble.
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