Retraction strategy, do you know it? In the following article, we will see how this WONDERFUL strategy can help people who are starting in the world of Forex!
Identify the trend in the retraction strategy.
The first thing you will have to do is identify the market trend. This will determine the direction of the trades that will end up being placed at the end of the day. To be able to do this, you only need to look at the real market.
For example, if you are going to be doing day trading you should not go with the daily market trend specifically. And you must trade one hour or one hour and 50 minutes. That’s more than enough! What we are trying to tell you is that if you look at the daily trend you can get confused. So, you should be very careful with that.
Use 2 different indicators
So, once you have identified the one-hour candles you are going to have to use 2 different indicators. This, to be able to confirm the trend in the retraction strategy.
So, you are going to be using the 50 EMA and the 200 EMA. With these indicators you will be able to identify if the price goes up or down! The 200 EMA will tell you that this is not a downtrend, but it turned into an uptrend because of the 50 EMA.
Find entry points in your retraction strategy!
This strategy is awesome to make money! You will have to find the entry point. And doing that is quite simple! you will have to do it in active trading. Like for example, GBPJPY. If we have a chart with an uptrend, we will add some resistance and support levels,
Then for example, if we have an uptrend but it pulls back, it turns out into a support and resistance level. So, this is a good entry point for a long position! You can do this with other trends in other markets. For further information about these steps, we highly recommend you watch the video at the end of the article!
Profit taking!
Now let’s talk about taking profit and loss in this retraction strategy. This is HIGHLY IMPORTANT for this specific strategy. The first thing to understand to identify an uptrend or downtrend is that you are always going to see highs and lows.
So, you enter from the low support line. This means your take profit should be around. In the video below we can see that NZD/USD made a move to take profit and stop loss. If you lose, the price goes back down, and you will make money. But if you end up winning you will make around $800. But why is this happening? The stop loss is moved because it is not guaranteed that the price is going to touch the upper level. But the upper level can be identified with different time frames.
What must you avoid in this strategy?
The recommendation is that you can first analyze the support and the resistance level. You can have an entry point, but this strategy is different! It is not the same as others. Why? Because if you put 50 EMA or SMA it won’t be telling you if there is a downtrend or uptrend. Basically, it will just say that the price is consolidating. So, if you see this you shouldn’t enter. You should not enter the consolidated markets!
Conclusion
The retraction strategy is THE BEST strategy that you can test in the Forex market. Plus, if you’re interested in acquiring a Forex Platform, the BLW FX TOOL is one of the BEST OPTIONS for you! It will analyze the market and send you the best opportunities to make money! Plus, do not forget to follow our YouTube channel. With this, you will be aware of all the news that happens within this market, as well as new strategies and tips to generate a lot of money!