Salam.
One of the most useful ways of trading is to understand the price actions or movements. There are actually 3 types of price actions:
- Trading with round numbers
- Trading with Psycho levels
- Trading with historic prices
Trading with round numbers: Examples of round numbers are like 1.4900, 1.46500, and others alike.
A Psycho levels price are like 1.50000, 1.60000 and others alike. Now, can you spot the diffrence? To get from one Pscycho level to another may take you 2 to 3 months or maybe more. This can be demonstrate by referring to the EURUSD graph:
The first time the price hits the 1.4000 level was at 15th July 2009 and then it paased the 1.5000 level on the 21 October 2009, more than three months.
Trading with historic prices are not that complicated if you know how to use fibonacci lines and some autopivot tools. But, if you are not familiar with it, use the OHLC levels as your guidelines. Draw lines, a lot of them, from yesterdays, last weeks, last months OHLC. These line can really act as your entry and exit levels and also your support and resistance levels.
Till then, Hepi trading!
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