Cest quoi forex factory

An extreme example would be a 10R setup where the risk is pips and the reward is 1, pips. Compare that to a setup where the profit target is just pips from your entry. Which setup do you think stands a better chance of succeeding? However, in my opinion, traders who think this way are only viewing half of the equation. You need to combine asymmetry with high probability setups if you really want to get ahead in this business.

So how can you have a realistic expectation of a positive result while using an asymmetric risk to reward ratio? Here are a few ways to do just that: 1. Know Your Key Levels In order to achieve asymmetric returns, you must first identify key support and resistance levels.

Take the chart below as an example. Once we plot our key horizontal levels, everything becomes clear. If we know the distance between each range, we can calculate the risk to reward for any setup that comes along. These key areas are like the foundation of a house.

They offer a stable starting point in terms of where to focus your attention, as well as where to place your orders. Apart from learning to control your emotions, knowing how to draw support and resistance correctly is perhaps the most desirable trait of any trader.

In fact, once you know how to plot these areas, everything else becomes rather effortless. Think of it this way: if a bullish pin bar forms at critical support, the only way to know if a favorable profit to loss ratio is possible is to know the location of the next resistance level. If the pin bar requires a 50 pip stop loss and the next resistance level is pips away, you may have something worthwhile.

See what I mean? Evaluate Momentum Want to know which side of the market the big banks and funds are on? Sure you do. Luckily, determining where these institutions are positioned at any point in time is quite simple. All you need to do is evaluate the momentum. If the trend is pointing higher, it means most of the big players are buying the market.

Conversely, if the trend is heading lower, it means the banks and funds are likely selling the market. But I never said it was easy. Those are two very different things. All I did in the chart above was plot the swing lows and highs. As soon as I see this, it becomes obvious which side of the market I should be on. We can even take it one step further and plot an ascending channel. A close below that channel support is a good place to start.

If the pair breaks that, there is a good chance the market will rotate lower. Once you know where the big boys are positioned, you can watch for opportunities in the same direction. By trading along with the momentum, your odds of achieving asymmetric profits such as 2R or 3R increases exponentially. Use Measured Objectives This is my favorite of the three. Measured objectives are perhaps one of the least used tactics in the world of trading.

Most traders have heard of them, but few actually use them to their full advantage. For instance, there is only one way to determine the measured objective for a head and shoulders pattern. You measure from the neckline to the highest point of the head. Once we have that measurement, we simply measure the same distance starting from the neckline to a lower point in the market. We can find a similar objective on a pattern such as the broadening wedge. Notice how in this case, we measure the height of the broadening wedge and then use that same distance to identify a final target.

See the links above. However, you can see how objectives like these can help immensely when determining a final target. The minor swing high that formed before the breakdown was about 20 pips away. If we divide 20 into 93 we get 4. See how you can use these measured objectives to achieve a favorable Forex risk to reward ratio? That goes for your stop loss and your profit target. Without knowing these levels, how can you determine your R-multiple?

To calculate your R-multiple, you must first define your risk. So before placing your next trade, make sure you have defined two exit points—one for where you will exit for a loss and the other is your profit target. Formerly limited to governments and financial institutions, individuals can now directly buy and sell currencies on forex. In the forex market, a profit or loss results from the difference in the price at which the trader bought and sold a currency pair.

Currency traders do not deal in cash. Brokers generally roll over their positions at the end of each day. Some of these trades occur because financial institutions, companies, or individuals have a business need to exchange one currency for another. For example, an American company may trade U. A great deal of forex trade exists to accommodate speculation on the direction of currency values. Traders profit from the price movement of a particular pair of currencies.

These represent the U. There will also be a price associated with each pair, such as 1. If the price increases to 1. Forex Lots In the forex market, currencies trade in lots called micro, mini, and standard lots. A micro lot is 1, units of a given currency, a mini lot is 10,, and a standard lot is , When trading in the electronic forex market, trades take place in blocks of currency, and they can be traded in any volume desired, within the limits allowed by the individual trading account balance.

For example, you can trade seven micro lots 7, or three mini lots 30, , or 75 standard lots 7,, How Large Is the Forex? The forex market is unique for several reasons, the main one being its size. Trading volume is generally very large. This exceeds global equities stocks trading volumes by roughly 25 times. How to Trade in Forex The forex market is open 24 hours a day, five days a week, in major financial centers across the globe. This means that you can buy or sell currencies at virtually any hour.

In the past, forex trading was largely limited to governments, large companies, and hedge funds. Now, anyone can trade on forex. Many investment firms, banks, and retail brokers allow individuals to open accounts and trade currencies. When trading in the forex market, you're buying or selling the currency of a particular country, relative to another currency. But there's no physical exchange of money from one party to another as at a foreign exchange kiosk. In the world of electronic markets, traders are usually taking a position in a specific currency with the hope that there will be some upward movement and strength in the currency they're buying or weakness if they're selling so that they can make a profit.

A currency is always traded relative to another currency. If you sell a currency, you are buying another, and if you buy a currency you are selling another. The profit is made on the difference between your transaction prices.

Spot Transactions A spot market deal is for immediate delivery, which is defined as two business days for most currency pairs. The business day excludes Saturdays, Sundays, and legal holidays in either currency of the traded pair. During the Christmas and Easter season, some spot trades can take as long as six days to settle.

Funds are exchanged on the settlement date , not the transaction date. The U. The euro is the most actively traded counter currency , followed by the Japanese yen, British pound, and Swiss franc. Market moves are driven by a combination of speculation , economic strength and growth, and interest rate differentials.

Forex FX Rollover Retail traders don't typically want to take delivery of the currencies they buy. They are only interested in profiting on the difference between their transaction prices. Because of this, most retail brokers will automatically " roll over " their currency positions at 5 p. EST each day. The broker basically resets the positions and provides either a credit or debit for the interest rate differential between the two currencies in the pairs being held.

The trade carries on and the trader doesn't need to deliver or settle the transaction. When the trade is closed the trader realizes a profit or loss based on the original transaction price and the price at which the trade was closed.

The rollover credits or debits could either add to this gain or detract from it. Since the forex market is closed on Saturday and Sunday, the interest rate credit or debit from these days is applied on Wednesday. Therefore, holding a position at 5 p. Forex Forward Transactions Any forex transaction that settles for a date later than spot is considered a forward. The price is calculated by adjusting the spot rate to account for the difference in interest rates between the two currencies.

The amount of adjustment is called "forward points.

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