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Common Chart Patterns: A Forex Cheat Sheet

Making money on the forex market—or any other exchange, for that matter—can certainly be tricky. But thanks to a number of chart patterns, you can learn to anticipate price movements and act accordingly. Making money doesn’t have to be impossible.

Unfortunately, with so many different patterns out there, it can be difficult to figure out which ones are best for determining where prices will go in the near future.

To make your job easier, we’ve outlined five of the more helpful continuation and reversal patterns below in a forex cheat sheet. Become familiar with each of them to make better trades.

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3 Risks to Consider Before Trading Currency

The forex market is the largest investment market the world, and there are a number of different ways to trade it—spot transactions, currency swaps, options, foreign exchange swaps, and more. But, as with any kind of trading, there are risks to be wary of when you dip your toes into the game. To help you understand these risks, here are three things to consider before you start forex trading.

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4 Tools to Help You Create a Successful Forex Trading Strategy

Different analytical tools in your trading tool kit can help you locate buy and sell signals, identify and anticipate market trends, and help inform what position you should take. But to create a consistent and effective forex strategy, you need to understand how your chosen indicators can be used as checks and balances in a more comprehensive trading strategy.

The most successful traders are able to manage risks and rewards and see the bigger picture of their trading decisions by populating their tool kit with four types of tools: trend following, trend confirming, overbought and oversold, and profit taking. We’ve outlined why these four roles are essential and how they can complement one another to make you a savvier trader.

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How to Place Trade Stops to Maximize Profit and Minimize Risk

Stop-loss orders are the fail-safes of the trading world and the most common means by which traders balance risk and reward without staying glued to their computer screens 24/7. Like the name suggests, stop-loss orders are meant to limit potential losses by automatically exiting traders from their position in the event that price moves against them. If you were to buy a currency expecting an increase in price (called “taking a long position”), then you would place a stop-loss order to sell and exit your position directly below the current market value. This stop-loss order would only be triggered if the price drops below your stipulated threshold—in short, it will exit you from your position and limit your losses if the price decreases. If you entered into a short position expecting a decrease in price, you would place your stop in the opposite fashion, above the current market value.

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How to Calculate Margin for Forex Trades

Margin and margin requirements are something that no forex trader can afford to ignore. Margin has often been labeled a “good faith deposit” to open a position.

Margin is usually presented as a percentage amount of the full position—0.25%, 0.5%, 1%, 2%, and so on. You can calculate the maximum leverage you can use with your trading account based on the margin required by your broker.

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5 Things You'll Learn After 5 Years in Forex Trading

When you’re just starting out in forex trading, there are a variety of moving parts to consider and even more potential pitfalls to navigate. Here are five things you’ll learn on the road to greater trading success:

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Pips, Points, and Ticks: What's the Difference?

To those unfamiliar with financial markets, the words “pips,” “points,” and “ticks” may sound like something out of a Dr. Seuss book. But there’s a reason why these units of measurement exist in the trading lexicon. In order to assess risk and reward and understand profits and losses, it’s important to know what these terms mean in different contexts.

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Forex Fundamentals: Using Oscillators in Your Trading

The term “oscillators” describes histograms that swing in a repetitive fashion between two states or points. These high and low states typically indicate overbought and oversold market conditions, allowing traders to use trendline movements to determine when to enter and exit a trade and what position to take.

In forex trading, the most popular oscillators are momentum indicators. Because changes in momentum are directly correlated to changes in price, traders also use momentum indicators to gauge trend strength and determine the likelihood of a divergence.

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Moving Average Indicators: Which One Should You Pay Attention To?

Odds are you are already very familiar with the moving average (MA) as a trend indicator. The moving average adds a factor to any chart you’re analyzing to show exactly where price action is happening. There are plenty of strategies to apply to the forex moving average, so today we’ll go over a few key things and address which moving average indicators you should pay particular attention to.

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Why Every Trader Needs to Follow a Forex Economic Calendar

A forex economic calendar is a key tool if you want to achieve any kind of success in the competitive world of currency trading. It offers an insight into market movements, allowing a trader to work to anticipate the way that the market functions. With releases of economic data, such as the US non-farm payroll number or GDP, the market can make sharp moves, and not all are predictable. However, they do create opportunities. When it comes to forex trading, choosing to utilize a forex economic calendar should be a no-brainer. Here’s why.

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