Chart pattern trading is very much popular among the professional traders. Most of the time the market exhibit high volatility during the event of the heavy impact news release and the professional traders use the reliable chart pattern to catch the large movement of the market. Unlike the professional traders then novice traders in the forex market trade the news release without having any proper knowledge about the financial sector and thus incur a heavy loss. It’s true that trading the chart pattern is extremely difficult for the novice traders but if you follow simple three techniques then you can also trade the head and shoulder chart pattern like the professional traders.
The daily time frame
The head and shoulder chart pattern can be identified out in many different me frames. But if you look at the professional traders then you will notice that most of them are using the easyMarkets app to find the bearish reveal head and should chart pattern in the daily time frame. Most of the novice traders in the forex market don’t have the patience to wait for the high-quality signals in the market and thus they trade the smaller time frame. But in order to secure the best possible traders in the market, you need to trade chart pattern in the higher time frame.
Use price action signal to confirm the breakout
The head and shoulder chart pattern is a strong bearish reversal signal in the market. The professional traders trade the break of this pattern once they find the price action confirmation signal in the easyMarkets app. Price action trading strategy is considered to be one of the most reliable trading strategies in the world and if you look at the professional traders then you will notice that most of them are trading the breakout of the neckline with strong bearish price action signal.
Do the fundamental analysis
Chart pattern trading is based on technical analysis but the professional traders always do the fundamental analysis in the market to enhance their winning edge in them market. So when you spot a possible head and shoulder chart pattern in the easyMarkets app make sure that you do the fundamental analysis in the market since you’re trading against the trend in the market. But when you execute any orders after the breakout of the neckline make sure that you follow perfect risk management factors since the market exhibit lots of false spikes during the major breakouts.
Summary: Chart pattern trading is very much profitable in the forex industry but when you trade the breakout of the chart pattern make sure that you follow proper risk management factors. Try to trade the chart pattern in the daily time frame since trading the smaller time frame will increase the risk exposure to a great extent. Don’t execute any trades based on technical analysis rather try to use all three major forms of analysis in the forex market.