Opportunities for Profit in Foreign Exchange Trading

In the financial trading market, how should we have the correct understanding and expectations of trading and make the right trading choices？

Based on Lewis six-year trading experience in the market, I found that most investors have a large cognition gap on investment transactions. To profit in the market, Lewis believes that what you need to have is professional technology with a good trading mentality. This is also the trading concept and mentality that LewisForex mainly imparts when educating students.

In the content of this article, LewisForex will share with you the key opportunities for profit in the market.

First, the logic behind investment.

When trading in the market, investors must first have a correct understanding: all financial transactions are a process of obtaining potential rewards through a certain risk. For example, if we enter the market at XAUUSD 1,850 USD/oz enter, the stop loss point is set at 1,840, and the stop profit point is set at 1,870, which represents my Risk and Reward Ratio is 2. Each unit of risk can be expected to obtain 2 units of potential rewards, so this list will be a very good trading opportunities and planning, and this is an example of potential rewards in exchange for fixed risks.

The core concept of LewisForex is “control your own risk, and get the rational money”. When you cannot clearly tell the position of the stop loss on a trading order, it means that you have not done a complete trading plan, so the existence of the nature of gambling is a big problem for transactions, and it also means that performance and profit cannot be stable, and large losses are prone to occur.

Second, are technical indicators useful？

In the financial trading market, many people use technical indicators to help them trade. Whether it is judging trends or finding trading positions, they can help us through indicators. However, Lewis believes that technical indicators will have certain blind spots and problems. For example, when we use the KD indicator (Stochastic Indicator), when the Golden Crossover appears, we will usually tell us in the textbooks that it is a good buying signal, but from the long-term quantitative back-testing of financial observations, the KD indicator, the winning rate of transactions reached by trading signals, is only 38%, which is not a good trading indicator. From another point of view, when the KD indicator appears trading signals, global investors also simultaneously appear trading signals. In the world of financial trading, when someone buys, others sells it. Therefore, when investors all over the world are buying, who is selling it？ This question is worth thinking about by investors!

Therefore, all technical indicators have this blind spot. LewisForex found through quantitative back-testing that there is only one more reliable technical indicator, namely MACD, which is among all technical indicators. After twenty years of quantitative back-testing, MACD is considered as the only one profitable technical indicator. So if investors have a soft spot for technical indicators, they can pay more attention to the use and content of MACD.

Third, carefully choose products that suit you.

In the foreign exchange margin market, usually brokerages provide index CFDs, commodity CFDs, and foreign exchange currency pairs for investors to trade. Each commodity has its own characteristics and the value of the corresponding economic data and market band. For example: XAUUSD is more inclined to display market sentiment, XAGUSD reflects the global industrial boom and other signals, and different commodities must observe different economic data to react.

In addition, each commodity also has its own volatility range. We can select commodities suitable for trading and investment through Average Daily Range (Average Daily Range, ADR). If you are a penetrating trader, then you should choose operating commodities with high volatility, such as: XAU/USD, GBP/USD, GBP/JPY, etc. This type of commodity has high volatility, and it is easier for investors to capture a certain spread space from it to achieve the goal of profit.

For investors who like to operate Martingale Strategy, then commodities with smaller ADR will be your first choice, such as cross currency pairs: EUR/CHF, AUD/NZD, etc. This type of currency pair has low volatility and is easy to fluctuate up and down. The range is very suitable for Martingale which likes to oscillate.

Finally, I hope that investors have a correct understanding of the foreign exchange market. The highly leveraged foreign exchange margin provides investors with the opportunity to use funds properly. They can operate and earn rewards without too much capital, but they must not hold onto it. With the illusion of getting rich overnight, it will easily lead to an imbalance in the control of one's own funds, soaring performance and falling, unable to get stable rewards.

Lewisforex: “control your own risk, and get the rational money”. Hope anybody can get the rational profit in the forex market.