The novice traders always look for the loophole to make a quick profit. They keep on using different kinds of trading methods and expect to secure their monthly income from one single trade. We are not saying that this is not possible but for that, you need to learn some advanced trading techniques. For instance, if you learn to trade the major chart pattern, it is possible to make a decent amount of profit from a single trade.
Learning about the chart pattern trading technique is not so easy. However, by following some key rules, you should be able to scale your trade in a systematic way.
Now let’s learn some of the key processes by which you can truly master the chart pattern trading strategy within a short time.
Knowing your goals
To master the art of chart pattern trading techniques, you must know your goals. Without knowing your trading goals in a precise way, things are going to be challenging. Thousands of novice traders try to take their trades without having a specific goal. Eventually, they break all the basic rules for money management. In fact, some of the traders expect to double their account balance from a signal trade.
As long as you trade the market with irrational goals, you should not be expecting a consistent profit. You need to set your mind on achievable goals and trade the market with logical steps. Only then you can become good at trading.
Analyzing the currency pairs
The price movement of the currency pairs tends to vary from asset to asset. Usually, the cross and synthetic pairs provide choppy price movement which makes it difficult to find reliable trade signals. That’s why most of the smart traders at Saxo prefer to trade the market with the major pairs as it eases the overall process of trading.
Though the major pairs are very trending in nature, it also provides a decent chart pattern trading opportunity. In fact, you can trade the major reversal with a high level of precision.
Identifying the breakout
Most people fail to identify the breakout in the correct way. Though you will be doing data analysis in a higher time frame, there is a chance you may experience a false breakout. To deal with such critical problems, it would be wise to use the basic candlestick pattern.
For a bearish breakout, you need a closing of the candle below the support level. Similarly, if you intend to take a long trade, it would be wise to wait for the bullish closing of the candle above the resistance level.
Once you start to use reliable candlestick patterns in the breakout identification process, you should be able to earn more money.
Analyzing the risk to reward ratio
Being a chart pattern trader, never think you can trade the market without analyzing the risk factors of the market. To keep your fund safe, you should always trade the market with 1:4+ risk to reward ratio factors. The overall risk exposure for the trade should not exceed 2% of your account balance.
Though the chart pattern trading system has a very high win rate, still you should be concerned about the losing trades. No matter how reliable the pattern is, you should have the mentality to accept few losing trades. Consider the loss as a part of your business cost.
Avoid trading the news
The rookies often think they need to trade during the news hours to maximize their profit in chart pattern trading techniques. The market becomes extremely volatilite and even if you identify the major chart patterns with a high level of precision, you have to deal with heavy slippage during the trade execution process.
To ensure the safety of your capital, we strongly recommend that you learn to take the trades during the stable hours of the market. Analyze the severity of the news and find a safe window to execute the trades.