Here I am, stepping into the world of trading electronic contracts—a part of the exciting global financial markets. If I want to succeed here, I need to get a handle on market analysis. This field is huge, and honestly, anyone can get involved. First off, I need to set up my account with my preferred broker, which involves sharing my contact and financial info to ensure smooth electronic transfers between my bank and the broker. Let’s be real—trading isn’t about luck! I’ve got to strategize by using financial tools, indicators, oscillators, and those key reports. To do well, I need to grasp how the market works, so brushing up on some math skills is definitely on the list for beginners like me.
Now, to someone who isn’t familiar, trading might seem like a boring routine, but trust me, there are tons of trading styles to dive into: fundamental, technical, momentum, scalping, swing, and more. The absolute worst move I could make? Random trading with no strategy or analysis at all!
If I’m just getting started, I should definitely get comfy with technical analysis first—it’s much simpler than jumping into fundamental trading, which involves digging into corporate events like earnings reports, stock splits, mergers, or reorganizations.
Technical trading is all about keeping my focus on the charts and graphs. I'm checking out those stock or index graphs for signs of convergence or divergence that shout "BUY" or "SELL." Even a newbie like me can learn to read support and resistance lines.
With the Pocket Option terminal, I’ve got all the tools to set up those technical lines in just a few clicks. Plus, I can get a free demo trading account—perfect for gaining experience without risking my cash. It’s all about testing out different strategies until I find the one that clicks with my investing knowledge and experience.
How do I build technical lines and read trends?
I keep a close watch on price changes of stocks because they’re the most obvious signs of a company’s financial health. Price changes? They dictate market trends! Got my support and resistance levels ready? Those are the points where supply and demand meet. Prices fluctuate based on supply imbalances (which pull prices down) and demand imbalances (which push prices up). I should know there are three types of market conditions:
- Flat Market: No action here—supply and demand are pretty much even.
- Falling Market: Prices are on a downward trend, and investors think this fall will continue, which just keeps the negative cycle going.
- Growing Market: Upward momentum! Share prices are rising, and investors believe this trend will stick around for the long haul. In other words, demand is driving the action.
So how do I predict market trends? Technical lines are my best bet. I can quickly build support and resistance lines in the comprehensive PocketOption broker platform designed for innovative strategies by hitting the “Build” icon.
Here are some ground rules for those support and resistance lines:
- Support is the price level where demand is thought to be strong enough to stop the price from falling further. Basically, as the price nears support and gets cheaper, buyers are more likely to jump in while sellers back off. When the price hits that support line, it’s believed demand will overpower supply and keep prices steady or bounce up. To draw the support line, I just need to find two minimum prices and connect them with a line.
- Resistance is the price level where selling is thought to be strong enough to stop price increases. This one’s easy—when prices rise toward resistance, sellers want to cash out, and buyers become cautious. Once the price reaches that resistance level, supply is expected to overtake demand, stopping any further price hikes. To draw the resistance line, I find two maximum prices and connect them. Important note: the last point must be lower than the previous one.
The Pocket Option terminal gives me all the tools I need to create those technical lines. I just need to select “Trend Line” from the “Build” menu, identify those support and resistance lines, and draw them out.
Technical Trading with Support and Resistance Lines
When I use support and resistance, the key is to watch for breakdowns and breakouts. A breakdown means a stock is dropping below support, while a breakout means it's shooting above resistance. Remember, though—support and resistance levels are just estimates and not guarantees.
Here’s the rundown for trading based on technical analysis:
- When the price “bounces” up from the support level and shows an upward trend, it’s time to Buy.
- When the price “bounces” down from the resistance line during a downturn, I’m looking to Sell.
And here's a pro tip: set the expiration period to match the formation time of two candles. I can work with any timeframe, and this strategy works well for both short and long trades.
By keeping track of and interpreting those support and resistance lines, I unlock a wealth of insights through technical analysis. A chart is essentially a time capsule of price movements over days, years, or even decades. Overall, using support and resistance lines could lead to my successful trading strategy.
