After completing the analysis of the market, a trader needs to know he will play in enhancing or a fall. In addition, by this time he must decide what portion of their capital should be invested in the deal. And finally, the last step is the actual purchase or sale contract. This is a very complex part of the process of trade on margin, where the definition of a specific point in the opening and closing positions must be as accurate as possible. The final decision on how and where to enter the market should be based on a combination of technical factors, the principles of money management and the type of stock orders.
The peculiarity of the exact time of entry and exit based on technical analysis is very short-term nature of this analysis and determined days, hours or even minutes, not weeks or months. But in all cases using the same technical tools. Next, we consider the most general terms of such an analysis.
1. Tactics at the break.
There are three options trader with breakout in prices:
take a position in advance, in anticipation of a breakthrough;
open position at the time of breakthrough;
wait for the inevitable retracement after the breakout.
There are arguments for and against each of the three approaches, sometimes a combination approach. When working with several lots, a trader can open in the same position on each of three stages. You can take a short position prior to the expected breakthrough, then buy another immediately after the break and, finally, to open additional positions during a minor fall in prices during the correction following the breakout.
If a trader sells a small position, then his decision primarily influenced by two considerations:
by what means he is willing to risk on this trade;
how aggressively he will act.
The most conservative trader in this situation, open a long position on a pullback in prices. But, paradoxically, expectant management can also be risky - in the sense that, expecting a backlash, you can skip all the time of entry into the market.
2. The intersection of trend lines
This signal can enter the market or get out of it early enough, especially when there is a significant intersection, repeatedly "proven" trend lines. Of course, we can not forget about other technical factors.
In the case of the trend line as the level of support and resistance are opened long positions when prices fall to sustainable levels rising trend line, and short - with the rise to the level of the descending trendline.
3. Using Support and Resistance Levels
The breakthrough level of resistance may be a signal to go long, then you can protect with a stop order. It can be placed under the nearest support level or, for greater security, directly below the breakthrough that will now serve as a support.
The rise in prices to the level of resistance in the downward trend and fall to the level of support at the rising trend can be used to open new positions and add lots to the existing profitable positions. When you select a protection level of suspension should first pay attention to the support or resistance levels.
4. The use of price adjustment
With the rising trend of falling prices intermediates constituting a percentage of the previous growth of Fibonacci can be used to open new or additional long positions. It should be noted that in this case the analysis of percentages of length correction refers to very short periods of movement of the forex market.
Opportune moment to open long position is a 38% retracement in prices that occurs after a bullish breakout in upward trend. Very useful to open short positions when the price will bounce downward trend upward, covering from 38% to 62% range last fall.
5. Spacing
Price gaps formed by bars of the chart, can also be used to select the optimal moment of opening or closing positions. For example, gaps are formed in the process of rising prices, then often act as support levels. Therefore, when an upward trend is expedient to open long positions when prices fall to the upper border of the gap or slightly below, inside it. A stop order can be placed under a space. If the downward trend in the short position is opened when prices rise to the lower border of the gap or even partially fill it. Protective stop order in this case is located above the gap.
6. Averaging
Averaging is a trading strategy where you make a mistake, or simply made any transaction (the first that came to mind), and the price went against you, and you make the same type of operation is more advantageous price. The main disadvantage of averaging is that you do not know in advance as to what prices will go up against your market. But averaging requires each time (after the first) to invest double the previous amount of margin. But if you have a lot of money - you can afford the price movement of 100, 200 and more pips. While such shifts in the market occur infrequently - yet this is not the best strategy, especially if you see wrong with the definition of the trend.
Possible strategies for working
The first trading strategy is long-term maintenance of open positions (from several days to several months). This trading system uses strategic investors and speculators semi. Maximally effective in the emerging trends and the least profitable at the side or sluggish trends. Requires mandatory safety net of related work and on the futures exchange options market. When working on long positions are not as important as technical analysis, fundamental analysis is. The share of long positions in the practical work a trader should not exceed 15% of the amount of margin. And analysis for opening long positions will assist you with a short game, as follows:
define long-term support and resistance levels;
strong long trend will warn you when you work against him on short positions;
you will have a psychological confidence when playing on a short position in the direction of a long trend.
The second strategy is to work on medium-term trends with duration of up to several days. It is also desirable safety net options. The most attractive for non-professionals. The average position is more stable for profit, although the analysis in decision making for this game a little more complicated. The quality of work also depends on the ability to conduct short game (to choose the moment of opening and closing a position). When you open the middle position is not only a technical analysis, but also carefully viewed: will not any any news of a fundamental nature to the time of closing the position, whether the closing of a regional Forex market at this time. Psychological factors play into the background. With all the external stability, be sure to keep an eye on the market, because it is able to present any surprises at the wrong time. If you're mid game based on the fundamentals, then watch carefully as to ensure that technical analysis, at least not contradict your positions.
The third strategy is to trade short-duration open positions from several minutes to several hours. It is used by professionals. Pros: there is no risk of adverse fundamental news and price changes during your absence. Disadvantages: high costs (commissions, spread, communication services, etc.), high risk of adverse short-term price changes, requires constant monitoring, concentration and stress during the workday. The main helper in the work will be oscillatory methods of technical analysis (using the rules for choosing the date of opening). Do not obsess over small gains obtained in this work. You risk losing all the fast that long and a large number of transactions earned.