Knowing False Signals In Forex Trading
In forex trading some traders must have known about trading signal terms.signals in forex trading can be interpreted as a gesture to open a buy or sell position that is equipped with the setting of take profit and stop loss level. But as is known if not all the existing signals are accurate. There is a signal called a false signal in forex trading. False signals are cues that appear and reassure as if prices are moving in one good direction, but that condition has not been confirmed by supporting indicators. The cause of the occurrence of these false signals can be from the change of price movements that exist in forex trading.
How To Recognize The False Signals In Trading
See the direction and strength of the trend
The first step to filter out counterfeit trading signals is by identifying the direction and strength of the trend. So if there is a trading signal with the direction opposite to the direction of the latest trend then it is better you be careful
There is no confirmation of the supporting indicators
Make sure you wait for confirmation from the supporting indicator to be completely in line with the existing trading signal. This is because even though there is a trading signal that looks convincing but if there is no confirmation it could be just a false signal. For that reason do not rush and wait for confirmation from supporting indicators
Pay attention to economic news and events
It is important for you to pay attention to economic news. This is because economic news always has a high impact in moving prices without any warning from previous signals. To avoid this you can use the forex calendar. Economic news that has a high impact in price movements is usually marked by three stars, three bull heads, red and other high scales.
Avoid excessive trading
Lowongannya time to make a lot of forex traders who then tempted to open positions every time a signal from their indicator appears on their chart pair.Though the signal is uncertain and it could be that the signal has a low quality or false signal. Having too many open and closed positions at times when there are false signals will of course be very risky. For that rather than excessive trading, you better trade with a more rare time but when there is a signal with high quality.
Avoid inconsistent trading systems
The key to success from trading is to use a consistent trading system. If you are the type of person who likes to replace your trading system, you may be stuck with a false signal because of wrong in understanding the market. Especially for traders who are still beginners and do not have their own trading system, very ranges in reading market conditions with the system they use, which ultimately makes them get false signals. For that would be better if you only use one strategy or trading system, but you really understand it and adept to use it
Understand the location of the support-resistance
Knowing where the point of support and resistance is what you should do before you react to a signal. The market has a recurring nature. So the price could have a great chance of bouncing or bouncing around that point. But it will not happen in the case of a breakout. False signals can usually appear before the price moves touch those limits. For that you must be careful and understand about support and resistance.
Use the Daily time frame
Time frames can be one of the mistakes in setting up the trading system. The time frame you choose can be a determinant of signal quality. This is because the frequency of occurrence of candlestick rods depends on the time lag. The appearance of false signals is more common in lower time frames such as time frames below H4 or four hours. To avoid these false signals you better use the time frame D1 or daily especially for the beginner.