Forex strategies: How to avoid false signals

PanARMENIAN.Net - For successful trade in the Forex financial market it is possible to use various strategies.

Many traders like a method which uses a stream of warrants. It realizes the main dream of each player and allows to foresee the further behaviour of currency quotations.

Certainly, it is possible to remember about various indicators and analytical tools, which are available on Forex, however they do not solve a very important problem — allowing to withdraw the trader on the wrong direction. But the stream of warrants in this situation becomes a lifesaver as it allows to see false signals.

For increasing the trading efficiency traders simultaneously use several indicators. More skilled players prefer to develop their own forex trading strategies and follow them exclusively. Someone uses signals from more skilled traders, but each category thus uses only two choices for entering the market:

● conservative;

● aggressive.

The last one has such a name because of high risks when the price on trading auctions can turn in the opposite direction at any moment. However opening of a position after close of the candle is already recognized for a long time as a classical case and all traders practice it.

If you prefer to conduct more quiet and conservative trade, it is worth to enter the market after the break of an alarm bar that is while the price punches the minimum or maximum value of an alarm candle.

How to avoid false signals correctly

If you observe candles on the quotations charts, it is possible to notice a number of regularities. In particular, it becomes obvious that if the next candle does not punch the minimum value of an alarm one, such signal could be considered as a false one. In this way the trader concludes that it is inexpedient to open the transaction at the moment. But if the second candle punches the minimum value, you can safely open position for sale. Closing of an alarm candle below a minimum can become an additional message for doing this.

You can act the same way, if you receive the signal for purchasing, but for this purpose the second candle should pass through the peak of the first. What does it mean? You should analyze graphics very attentively and act according to the chosen style of trade, avoiding errors and emotional outbursts under no circumstances.

Features of Order Flow Trading

Certainly, the Order Flow Trading method, having countless advantages, also has disadvantages. First of all, the trader, who works on forex, loses the value of the whole candle in points. That is why you should refuse the scalping strategy if you use it when trading, as the method loses its relevance.

There are also other situations, when using this method is not advisable, for example, at the general "bear" behaviour of the market or low volatility of the currency pair. In this case it is better not to follow a signal for the purchase. The same situation could be observed during the bull movement when the player should ignore a signal for sale.

Also, you shouldn’t forget that Order Flow Trading method on a stream of warrants does not deprive you of the main risks. Otherwise all traders would apply it in trade and would bathe in profit. Why does this happen? First of all, dramatic price changes impede which could be noticed frequently after the publication of important and unexpected news. Therefore traders set the level of stop-losses for the additional insurance.