Forex trading can be fun if you can master the skill of risk management. In my opinion, the most important thing in any trade is risk management. If you risk 30 pips per trade and make 100 pips on average, even if you have a 50% winrate you will be making 350 pips in 10 trades ( 50% winrate means in 10 trades you win 5 trades and you lose 5 trades on average. Winning 5 trades means making 500 pips and losing 5 trades means you lose 150 pips so you make a total of 350 pips).
There is a no 100% winning trade setup. Every trade setup has a probability of failure. When you enter into a trade, you are taking the risk. With a small risk you ensure that if the trade setup fails you will not lose much. The trick lies in entering small and testing the waters. When the trade moves in your favor and you become pretty sure that you have caught a good move, you should open more positions. This will ensure that you multiply your profits manifolds. The important question is how we do it. I use candlesticks a lot in my trading. H4 candle and H1 candle are very important and they can give you very important clues where the price is going and where you should place the stop loss. I don’t bother about M5, M15 but use M30 candles as well as H1 and H4 candles in making my entry and exit decisions. I only open a trade at the close of M30, H1 or H4 candle.
All indicators are lagging and unreliable. The most reliable indicator as said above is price action. In the screenshots you will see Stochastic and MACD oscillator. I use them only 30% of the time while the use candlesticks 70% of the time. Moving averages work as strong support and resistance levels. I use moving averages as support and resistance levels.
This is precisely what I do. As I said above I look at the candlesticks 70% of the time and make my trading decisions. I use the candlestick high and low as stop loss levels also. So as a trader you should focus on price action much more than the indicators. Using price action solely is also known as Naked Trading. The shape of the candlestick can give you very important clues what the market is thinking and where the price is going to hit next.
This is what I do. Every morning, I first look at the Daily Chart. The daily candle shape, high, low open and close tell me the most probable shape of the daily candle that will be formed that day. Once I have analyzed the daily chart and make my mind in which direction the market will move, I then look at the H4 chart for possible entry signals. I only enter into a trade at the close of H1 candle or H4 candle as I have said earlier. Sometimes I also use M30 candles but I never use M15 or M5 candles. The shape of H4 and H1 candle is very important when making the entry and exit decisions. With practice you will know when to enter and exit the market. Daly the first thing that I do is look at the economic calendar of the day. You can use Forex Factory and Daily FX economic calendars. The time of each news release is important as near that time you should expect volatility.
Below I explain in detail how to double your account in 1 day. This is a recent trade. On Friday was the NFP Report release. The red arrow in the screenshot below shows the H4 candle formed after the NFP Report release. You can see price first went up made a high and then fell. The closing price is the same as the low. This is a bearish candle. When the close and low are the same, you should expect the price to go down more as this indicates downward momentum. I close the charts for the day.