One of the most common mistakes traders make is picking the market top or bottom. It's like trying to catch a falling knife. As the expression implies, it can be downright dangerous and is not normally recommended. But here are different trading methods that may help traders lower the risk and indeed turn market reversals into a profitable trading strategy. You just need to know how to spot market reversals.
It is often easy to talk about the market reversals, however spotting the correct reversal is the main challenge for traders. In this online training we will be looking into multiple ways on live chart and select a few simple ways to spot Forex market reversals.
How to Spot Market Reversals
To start with, you have to first redefine your trading psychology and make sure that while looking for market reversals you don't try to prove yourself right, but indeed follow the trend. Just like in trend following, you can not define or identify market reversal on small time frames, thus the larger the time-frame the more accurate your analysis will be. Therefore, we will only be coveringÃƒÆ’Ã¢â‚¬Å¡Ãƒâ€šÃ‚Â weekly, daily, and hourly time-frames.
Which indicators can I use to spot market reversals?
Traders are often confused about indicators, and instead of making their trading simpler, they keep on adding more and more indicators to their trading charts which in return end up complicating their trading strategies and ultimately ending up with large losses. During the how to spot market reversals training we will start with simplifying our trading charts so that reversals become easier to spot. We will be using the following tools to identify the actual market reversals:
1- Moving averages
Just like in price action analysis, moving averages are great tools to define the trend direction, support and resistance levels as well as actual market reversals in Forex and Stock market. In this session we will be using 20 and 100 SMA.
MACD is another great tool which is based on moving averages as well, which we use to follow the trend as well as identifying market reversals.
3- Price action
Price action trading is probably the best way of utilizing market reversals. Thus, we will be using certain tips to utilize this trading role.
Adding all the above together traders will be able spot market reversals.