RoboForex - company news and official support for customers

Reversal Patterns: How to Detect a Change in Trend Direction?

Author : Maks Artemov

Dear Clients and Partners,

Imagine a distinct uptrend that has long been in the market. How do we know when it is over? Or, if a descending dynamics last long, how do we know where it reverses? These are the questions that many traders are perplexed by.

There is no unique answer to this question. The trend may reverse at any time, so the trader's task is to detect the time and place. There are lots of theories, practices, indicators, and other ways of market analysis meant for this.

Today, I will speak about a classical method of detecting a trend reversal. Watching the charts, market players have come to certain conclusions about the laws of price movements. At specific moments, the impulse comes to an end, and the trend changes its direction. Let us have a look at a group of reversal patterns, which are likely to precede a trend reversal.

What patterns do we look for?

Before speaking about reversal patterns, a small remark: candlestick patterns may have different names in different strategies and translations; moreover, they may differ slightly in appearance, however, their essence remains the same.

The main candlestick patterns at the top of the trend would be:

1. Shooting Star
2. Hanging Man
3. Doji
4. Gravestone Doji
5. Harami
6. Engulfing

Reversal patterns at the top of the trend

One condition, common for all reversal patterns, is the presence of a strong support or resistance level and a long-term trend.

Shooting Star

It looks like a candlestick with a small body and a very long upper shadow. It normally forms after the abrupt growth of the quotations. The lower shadow, in this case, will be short. Ideally, the body of the candlestick and the impulse have opposite colors (after a row of growing candlesticks, the Shooting Star is a descending one).

Hanging Man
.
In essence, it is an inverted Shooting Star. The upper shadow is minimal or lacking, the body looks small, the lower shadow looks rather long. The Hanging Man is similar to the Hammer.

Doji

These candlesticks may form at any place of the chart and still have the name Doji. Other candlesticks are different, and we will discuss them later on.

A Doji looks like a cross or a "+". This means it has tiny shadows, and its body looks like a line because the opening and closing prices are on one line. Some Dojis have two long shadows and are called Legged Dojis; however, the signal they give is the same.

Reversal patterns at the bottom of the trend

Now - to the reversal patterns at the bottom of the trend. I should make it clear that the candlestick patterns themselves may look absolutely identical to those that form at the peak of the trend; however, they have different names. The work off is also the same: a trend reversal.

Hammer

It looks like the Hanging Man: a small body, a small or lacking upper shadow, and a long lower shadow. The only difference is that the pattern forms at the bottom of the trend.



Inverted Hammer

It is similar to the Shooting Star: a long upper shadow, a small body, and an almost lacking lower shadow. Like the Hammer, it forms at the bottom of the trend.

Engulfing

It consists of two candlesticks. The first descending bar has a short body, the second one is visually larger, and its body covers up the projection of the first pattern.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

Dear traders!

This week, the RoboForex company's project called ContestFX is waiting for everyone to participate in the following competitions:

The 144th competition of "Demo Forex" has gained "full speed".
The 405th competition of "Week with CFD" has just started.
The 539th competition of "Trade Day" will start on 22.03.2023 at 12:00.
The 453rd competition of "KingSize MT5" will start on 23.03.2023 at 20:00.

It does not take much effort and time to participate in our competitions - all you need to do is to go through a simple registration procedure, after which you'll get access to any of the contests you like in just a couple of mouse clicks.

We're looking forward to your joining in and wish you good luck!

Sincerely,
RoboForex Contest

Hi RoboForex,

Does RoboForex.com accept EU and/or UK residents as clients and offer high leverage, or do they/we have to use RoboForex.org with leverage limited to 1:30?

Thanks in advance for your reply.

Karl

Dear KarlKraus,

Thank you for expressing your interest in our company.

We would like to inform you that RoboForex Ltd and its affiliates do not target EU/EEA/UK clients. You can get more detailed information by contacting the Company's Live Support in any convenient way mentioned on our official website.

Sincerely,
RoboForex

Thanks - I understand this, but it doesn't quite answer my question.

I know you're not allowed to solicit EU/UK residents.

I'm asking something different: whether you will accept one, who comes to you and asks to open a high leverage account (which I believe you are allowed to do, though I know some brokers' policy is that they won't do do anyway - hence my question!). Thanks in advance for your reply.

How To Trade the "Moving Averages Based on Fibonacci Numbers" strategy

Author : Victor Gryazin

Dear Clients and Partners,

In this article, we will look at a medium-term indicator trading strategy using multiple moving averages based on Fibonacci numbers. We will find out which indicators to set and talk about the rules for making trades.

How the strategy works

Fibonacci numbers originated with the famous Italian mathematician Leonardo of Pisa, who was better known as Fibonacci. He investigated an infinite mathematical sequence that was later named after him. In it, each successive number is equal to the sum of the previous two numbers: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, and so on.

Dividing the previous number in the sequence by the next number gives 0.618. Dividing the previous number in the sequence by the next number through one produces 0.382. The golden ratio is based on this relationship. With the advent of exchange trading, the Fibonacci sequence began to be used in trading. Various tools based on Fibonacci numbers can be found in almost any trading platform.

This strategy uses the intersection of four exponential moving averages (EMAs) with periods corresponding to the Fibonacci numbers (5, 8, 13, 21) to find trading signals. Moving averages have long established themselves as a simple and effective tool for trend analysis.

When all four moving averages are moving horizontally and intertwined, this is a sign that the market is in a sideways corridor and there is no clear trend. When the price is rising and indicator lines begin to diverge and move upwards, this signals the beginning of an uptrend. When the price decreases and the indicators diverge moving downwards, it indicates the beginning of a downtrend.



How to install the Moving Average indicator

The Moving Average indicator is included in most modern trading terminals, displayed directly on the price chart. In the popular MetaTrader 4 and MetaTrader 5 trading platforms, you can install the Moving Average on the chart of the selected instrument through the Main Menu: Insert → Indicators → Trends → Moving Average.

In the window that appears, select period 5, colour and thickness of the line, and method MA: Exponential. Repeat these steps to set up three more moving averages with periods of 8, 13, and 21, selecting different colours for the indicator lines. This will result in four differently coloured moving averages on the price chart, which will be used to search for trading signals according to the strategy.

How to use the strategy in trading

This strategy is quite versatile and can be used on different timeframes and financial instruments. To trade, you have to wait for the price to move up or down out of the sideways range. In a sideways range, all four moving averages are intertwined and move horizontally – there are no trading signals.

A buy signal for the strategy

1. The price begins to rise, crossing all four moving averages from bottom to top, renewing the nearest local high
2. The moving average lines cross and begin moving upwards, gradually diverging from each other
3. A buy position is opened, and the Stop Loss is set at the nearest local low, which is below the moving averages
4. Take Profit is taken when the moving averages are crossed in the opposite direction, or when the price reverses and closes below all four moving averages

Advantages and disadvantages of the strategy

Advantages:

1. The strategy works well in trends, allowing you to profit from strong and sustained movements
2. The potential profit can be several times greater than the potential loss

Disadvantages:

1. As this strategy gives unprofitable signals during a flat period, it is better not to use it in a flat period
2. Moving signals can be slightly delayed, so a significant amount of profit can be lost on sharp market reversals

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

Hi RoboForex,

Sorry if I seem impatient but I'd be really grateful for a reply to my question asked above in post # 1,206, please. Thanks in advance.

Karl

Dear KarlKraus,

For timely and more comprehensive answers to your questions, contact our Live Support in one of the available ways mentioned on our website.
Our Support Service team may require further information in order to provide a complete answer to your question.

Sincerely,
RoboForex

RoboForex adds the Performance Fee scheme for CopyFX to the R StocksTrader app

Dear Clients and Partners,

Here we come with a long-awaited CopyFX update on R StocksTrader: RoboForex added a new possibility for the CopyFX Traders to earn commission from their subscribers - the Performance fee.

The Performance Fee

is a commission scheme in CopyFX which allows Traders to get the share of the total amount of profit made by their subscribed Investors, so the more your subscribers earn from their copied deals - the more commission you get.

This scheme mostly suits experienced and confident Traders who demonstrate a stable performance in the medium and long run.

Become a CopyFX Trader

More about Performance Fee

Why do Traders choose CopyFX in R StocksTrader?

Minimal investments

Minimal deposit of 100 USD.

High order execution speed at the same price

Instant copying of transactions with the same execution price for the Trader and the Investor guaranteed.

Comfortable app

Trade in R StocksTrader any time from any place and make a profit on commissions.

1,500+ instruments for copying

Take advantage of this unique opportunity and offer Investors more than 1,500 instruments to copy.
Copy trading is proven popular among our clients and partners. We are, therefore, constantly developing our products, enhancing them, and introducing new functions to both the desktop and mobile versions of the platform. Stay tuned for the next update!

Become a CopyFX trader in R StocksTrader now
and embrace all the benefits!
App Store
Google Play

Learn more about copy trading

Sincerely,
RoboForex team

Dear traders!

This week, the ContestFX project brings to your attention the following demo account competitions:

The 144th competition of "Demo Forex" has reached the final stage.
The 406th competition of "Week with CFD" has just kicked off.
The 540th competition of "Trade Day" 29.03.2023 at 12:00 will start on 30.03.2023.
The 454th competition of "KingSize MT5" will start on 30.03.2023 at 20:00.

Let us remind you that all winners of our contests receive prize funds to their real accounts, which they can use to earn more in the Forex market without investing their own savings as the starting deposit.

Join us!

Sincerely,
RoboForex Contest

How To Trade the On Neck Candlestick Pattern

Author : Victor Gryazin

Dear Clients and Partners,

In this review, we will get acquainted with the trend continuation candlestick pattern called "On Neck”. We will look at the features of its formation and the trading rules for its application. We will learn its main advantages and disadvantages, and also list a few important recommendations for its use.

How the On Neck pattern is formed

The "On Neck" candlestick pattern is a pattern that indicates a further continuation of the current trend. It is rarely seen on price charts. It consists of two candlesticks: the first has a large body pointing in the direction of the current trend, and the second has a small body. They are always of different colours: if the first candlestick is white, the second is black, and vice versa.

The feature of this model is that the second candlestick opens with a gap in the direction of the trend and then closes the gap with its body. The closing prices of the two candlesticks should be about the same. The first candlestick symbolises the "body", the second one is the "head", and the line connecting them and passing through the closing prices is the "neck", hence the name of the pattern.

The appearance of a small black candlestick after a large white candlestick in an uptrend indicates that the "bulls" have met temporary resistance, and when overcoming it, will be able to continue to move upwards. The appearance of a small white candlestick after a large black one in a downtrend indicates temporary support, through which the "bears" are likely to continue the downward movement.

Bullish "On neck" pattern

This is formed during an uptrend when there is an active upward price movement. The first candlestick of the pattern (large white) appears first, and then the second candlestick opens with a gap upwards. The "bears", trying to seize the initiative, return the quotations to the closing price of the first candlestick. The second candlestick (small black) absorbs the gap with its body, with the closing prices of the two candlesticks approximately coinciding.

A bullish continuation of the "On neck" pattern is formed on the chart. We must now wait for confirmation that the "bulls" are still strong enough to overcome the temporary resistance of the "bears". A further rise in quotations above the high of the pattern’s second candlestick will confirm this. This upward movement will mean that the buyers are still very strong, and the uptrend is likely to continue.



How to buy using the bullish on neck pattern

1. During an uptrend, a bullish "On Neck" pattern is formed on the price chart
2. It is recommended to open a buy position when the price rises above the maximum of the second candlestick in the pattern (small black candlestick). Stop Loss is set at the low of the first candlestick (large white)
3. To set Take Profit, you can focus on significant support and resistance levels

How to sell using the bearish on neck pattern

1. During a downtrend, a bearish "On Neck" pattern is formed on the price chart
2. It is recommended to open a sell position after the price decreases below the low of the second candlestick in the pattern (small white). Stop Loss is set at the high of the first candlestick (big black candlestick)
3. To set Take Profit, you can focus on significant support and resistance levels

Recommendations for the use of the pattern in trading

1. The pattern should be formed in a pronounced upward or downward trend – it is not traded in a sideways trend
2. Wait for a confirmation – an update of the pattern’s high/low – before opening a trade
3. To increase efficiency, the model can be used in conjunction with technical analysis tools
4. It is best to use higher time frames, from H4 and above
5. It is necessary to follow the rules of risk management and place protective stop-loss orders

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

False Breakouts on Financial Markets: How to Detect and Use?

Author : Andrey Goilov

Dear Clients and Partners,

Hi everyone, today I'm going to talk about false breakouts. In certain cases, it might be unclear to the trader whether there has happened a breakout of the resistance level and, hence, the bullish trend will continue. Such a breakout might be false so that the price will reverse quite soon and go in the opposite direction. In certain cases, such formations may provoke a full-scale reversal of the trend.

As a rule, such things happen at the moment of testing the support/resistance levels. This situation is similar to a reversal. However, it might be a test of a normal trendline, as well as the completion of such patterns of tech analysis as the Triangle or Head and Shoulders, when the price escapes the pattern and the falseness of such a breakout becomes questionable.

This type of breakouts pertains to chart analysis. If we are evaluating the chart without indicators, our evaluation will always be subjective to some extent. It is should be kept in mind that this is an integral part of chart analysis.

What is a false breakout?

In most cases, a false breakout is the "tail" of a Japanese candlestick, which means that the price tried to break the support level away but the sellers were not strong enough to secure themselves under this level. Then the price bounces and moves upwards. This might signify the strength of the buyers and forecast further growth.

Types of false breakouts

Larry Williams was one of the first experts to describe false breakouts. He singled out such a type as Specialists Trap. If the market is bullish, the pattern is formed at the breakout of the resistance level closing much higher than the resistance area. The minimum of the candlestick preceding the one with the breakout acts as a sort of a critical level here.



In the case of falling and breaking this level away, we should expect a market reversal and overall falling. Larry Williams thinks that here we can see the false breakout form when traders enter the market emotionally.

How to detect a false breakout?

Tech analysts give different hints on false breakouts of levels or trendlines. For example, a true breakout requires closing above the resistance level. If the close prices return under the level the breakout may be false, so no growth us to be expected here.

Also, there is a rule of 3% applicable to important levels and lines. It says that the prices must rise above the level by more than 3%.

Imagine we are watching good growth of the gold prices. The important support area is at the level of 1455. If this level is broken away we might speak about a potential reversal to a downtrend.

If we apply the rule of 3% here the price must fall below 1411 for the breakout to be true. A decline to 1450 and a return indicates a false breakout, after which the growth is likely to continue.



However, this rule is just an instrument that helps distinguish between true and false breakouts. Other traders add time filters or follow-up tests of the broken levels to avoid false breakouts.

How to use false breakouts?

Larry Williams points at the fact that it is impossible to know beforehand whether the level will be broken out or not. What is more, he insists on using our own methods of analysis to use false breakouts effectively. As we may see, when the market is growing and a reversal Double Top may form, it is likely that the breakout of the resistance level will be followed by a further decline of the price. So, if it looks like the pattern will form, no growth should be expected.

Conversely, if the market is falling and its structure reminds of a Double Bottom, one should not hurry to sell after a breakout. If the prices have managed to return inside the pattern soon after the breakout, a market reversal is likely to happen, so that the pattern will be executed.

Very often traders use the MACD indicator that shows divergences on the chart well. If at the moment of a breakout of an important level there forms a convergence or a divergence on the chart, the breakout is likely to be false and the market should be entered in the opposite direction.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

Dear traders!

This week, a RoboForex project called ContestFX will continue with the following exciting competitions:

The 145th competition of "Demo Forex" and the 407th competition of "Week with CFD" have just started.
The 541st competition of "Trade Day" will start on 05.04.2023 at 12:00.
The 455th competition of "KingSize MT5" will start on 06.04.2023 at 20:00.

It does not take much effort to participate in our contests: all you need to do is to register an account, and then any of the competitions you like will be available to you in just a couple of mouse clicks.

We're looking forward to your joining in and wish you good luck!

Sincerely,
RoboForex Contest

RoboForex: upcoming changes to the trading schedule in view of the Easter holidays

Dear Clients and Partners,

We are informing you that due to the Easter holidays in Europe and the US, there will be some changes to the trading schedule on Good Friday and Easter Monday.

This schedule is for informational purposes only and may be subject to further change.

MetaTrader 4 / MetaTrader 5 platforms

Schedule for trading on CFDs on the German index DE40Cash

1. 7 April 2023 – no trading
2. 10 April 2023 – no trading
3. 11 April 2023 – trading as usual

Schedule for trading on CFDs on the US indices (US30Cash, US500Cash, USTECHCash) and the Japanese index JP225Cash

1. 7 April 2023 – trading stops at 4:00 PM server time
2. 10 April 2023 – trading as usual

Schedule for trading on Metals (XAUUSD, XAGUSD) and CFDs on oil (Brent, WTI)

1. 7 April 2023 – no trading
2. 10 April 2023 – trading as usual

Schedule for trading on CFDs on US stocks

1. 7 April 2023 – no trading
2. 10 April 2023 – trading as usual

Schedule for trading on CFDs on US futures

1. 7 April 2023 – trading stops at 4:15 PM server time
2. 10 April 2023 – trading as usual

R StocksTrader platform

Schedule for trading on US Stocks, US ETFs, CFDs on US Stocks and ETFs

1. 7 April 2023 – no trading
2. 10 April 2023 – trading as usual

Schedule for trading on CFDs on US indices (US30, US500, NAS100)

1. 7 April 2023 – trading stops at 4:00 PM server time
2. 10 April 2023 – trading as usua

Schedule for trading on CFDs on the EU indices (GER40, UK100, FRA40, SPA35), the Australian index AUS200, and the Japanese index J225

1. 7 April 2023 – no trading
2. 10 April 2023 – no trading
3. 11 April 2023 – trading as usual

Schedule for trading on CFDs on EU Stocks

1. 7 April 2023 – no trading
2. 10 April 2023 – no trading
3. 11 April 2023 – trading as usual

Schedule for trading on CFDs on UK Stocks

1. 7 April 2023 – no trading
2. 10 April 2023 – no trading
3. 11 April 2023 – trading as usual

Schedule for trading on CFDs on US futures

1. 7 April 2023 – trading stops at 4:15 PM server time
2. 10 April 2023 – trading as usual

Schedule for trading on Metals (XAUUSD, XAGUSD) and CFDs on Crude Oil (BRENT.oil, WTI.oil)

1. 7 April 2023 – no trading
2. 10 April 2023 – trading as usual

cTrader platform

Schedule for trading on Metals (XAUUSD, XAGUSD)

1. 7 April 2023 – no trading
2. 10 April 2023 – trading as usual

Please take note of the above trading schedule changes when planning your trading activity.

* – This schedule is for informational purposes only and may be subject to further change.

Sincerely,
RoboForex team

Dear traders!

This week, the ContestFX project brings to your attention the following competitions:

The 145th competition of "Demo Forex" is gaining momentum.
The 408th competition of "Week with CFD" has just started.
The 542nd competition of "Trade Day" will start on 12.04.2023 at 12:00.
The 456th competition of "KingSize MT5" will start on 13.04.2023 at 20:00.

We'd like to remind you that winners of our contests receive prize funds to their real trading accounts, and they can use them to start trading in the Forex market instead of investing their own savings.

Good luck to all traders!

Sincerely,
RoboForex Contest

RoboForex has increased partner commission for Gold, Silver, Oil, and US indices

Dear Clients and Partners,

The RoboForex Partner Programme has become even better! We increased the partner commission for trading Gold, Silver, Oil, and US indices. As a RoboForex Partner you can now earn at least two times more when your clients trade these popular instruments.



Example of partner commission rate for Pro accounts:




Calculate your increased commission

Join one of the best markets' Partner Programme

1. High commission
   Earn up to 70% of the broker’s revenue, and additionally up to 20% within the framework of the loyalty programme.
   
   
2. Special Affiliate accounts
   Get maximum payouts with the help of client accounts with increased spreads and commissions for a transaction.
   
   
3. Multilevel programmes
   Create your own partner network in one of two schemes: 2 levels "VIP" programme, or 5 levels "Expert".
   
   
4. Copy-trading
   Attract clients to the CopyFX copy-trading system and receive commission like a Partner. And if you're an experienced trader, you can get two types of commission: one from investors copying your strategies, and the Partner commission.

How to become a Partner

1. Open a Partner account
2. Use promotional materials to attract clients
3. Receive your commission for your referrals' transactions

Open a Partner Account

Sincerely,
RoboForex team

How to Trade the Three Moving Averages + MACD Strategy

Autho : Victor Gryazin

Dear Clients and Partners,

In this article, we will look at a medium-term indicator trading strategy based on using three Moving Averages and MACD. We will learn how to set these indicators on the chart and apply them in trading.

How the Three Moving Averages + MACD strategy works

The "Three Moving Averages + MACD" strategy, as the name implies, is a trading system based on the combined use of trend indicators’ Moving Average (MA) and MACD (Moving Average Convergence/Divergence) oscillator signals. These are popular and in-demand tools, which are often used in various trading systems. To trade on the strategy, three exponential Moving Averages (EMA) with periods of 5, 15, and 50, and the MACD with parameters 12, 26, and 9 are applied to the chart.

The Moving Average has long been proven to be a simple and effective tool for trend following. In this strategy, the slow EMA (50) is used to identify the direction of the current trend and acts as a guide to limit risk, while the faster EMA (5) and EMA (15) are used to identify points to enter the market.

The MACD indicator belongs to the oscillator group. It helps to determine the trend direction, strength and duration, price range, and reversal levels and to receive trading signals. The MACD is used in this strategy to confirm the priority trading direction.

How this strategy works:

1. When the EMA (5) crosses the EMA (15) from bottom to top, there is a buy signal. The price chart should be above the EMA (50), and the MACD histogram should be in the positive zone (above 0)
2. When the EMA (5) crosses the EMA (15) from top to bottom, there is a signal to sell. The price chart should be below the EMA (50), and the MACD histogram should be in the negative zone (below 0)

How to use the strategy in trading

The Three Moving Averages + MACD strategy is primarily focused on the EUR/USD and GBP/USD currency pairs. Recommended chart timeframes - H4, D1. Recommended Take Profit (5 digits) for EUR/USD: H4 time frame - 1000 pips, D1 time frame - 2000 pips. Recommended Take Profit values (5-digit quotes) for GBP/USD: H4 time frame - 1250 pips, D1 time frame - 2500 pips. Stop Loss is set immediately after the EMA (50).

Three Moving Averages + MACD Buy Signal

1. Prices begin to rise, EMA (5) crosses EMA (15) from bottom to top
2. The price chart is above the EMA (50)
3. The MACD histogram is in the positive zone (above 0)
4. A buy position is opened, and the Take Profit value is set according to the above recommendations
5. Stop Loss is set just below the EMA (50)

Three Moving Averages + MACD buying example

1. On 17 March 2023, on the H4 chart of the GBP/USD currency pair, the red EMA (5) crossed the blue EMA (15) from bottom to top
2. The price chart was above the green EMA (50) at this point
3. The MACD histogram was in the positive zone (above 0)
4. The buy position was opened at 1.21070, and Take Profit was set 1250 pips higher at 1.22320
5. Stop Loss was set just below the EMA (50), at 1.20500

Three Moving Averages + MACD Sell Signal

1. Quotes begin to decline, EMA (5) crosses EMA (15) from top to bottom
2. The price chart is below the EMA (50)
3. The MACD histogram is in the negative zone (below 0)
4. A sell position is opened, and the Take Profit value is set according to the above recommendations
5. Stop Loss is set just above the EMA (50)

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

Dear traders!

This week, a RoboForex project called ContestFX will continue with the following competitions:

The 145th competition of "Demo Forex" has been running since the beginning of the month.
The 409th competition of "Week with CFD" has just started.
The 543rd competition of "Trade Day" will start on 19.04.2023 at 12:00.
The 457th competition of "KingSize MT5" will start on 20.04.2023 at 20:00.

It does not take much effort to participate in our contests: all you need to do is to go through a simple registration procedure, and then any of the competitions you like will be available to you in just a couple of mouse clicks.

Good luck to all traders!

Sincerely,
RoboForex Contest

Situational Vs. Systematic Trading: Which One is More Efficient?

Author : Andrey Goilov

Dear Clients and Partners,

To be successful on financial markets, you need a neat trading system that will give you a clear understanding of how to enter and exit the market either with a profit or a loss. The rules of money management are also worth sticking to as they will psychologically prepare you for a series of losing trades as well as profitable ones.

Trading with a high-quality system is different from trading without one is also better in the sense that you do not need to think about whether the situation on the market is good enough to enter. You simply follow the rules and open or close trades, moving along the price chart.

Unfortunately, no one can tell if the current pattern will be executed or you will have to close it at the Stop Loss. To find out, you just have to trade the chosen method. Of course, you can use certain lifehacks and take measures to increase the probability of the execution of the signal, such as trading on a demo account until you receive two losing positions and only then moving to a real one. There are plenty of ways and methods of trading in the world, and every day millions of traders try to conquer the market.

In this article, we shall have a look at the pros and cons of both systematic and situational trading, discuss their differences, and speak about the practicability of each of them.

Systematic trading

Here, we are talking about a simple indicator-based system that will give the same signals to a dozen of different traders. As a rule, systematic trading does not allow for more than one opinion about the current market situation; the trader just needs to open a position and wait or to wait for a signal to enter the market.

In one of our posts, we spoke about the Ichimoku indicator. At first glance, it seems too complicated, but it boils down to trading the trend and waiting for the entrance signal to form. After that, we open a position and wait for the signals to form. For example, if the price breaks through the Ichimoku Cloud bottom-up, then you can buy.



If the price breaks through the Cloud top-down, the trend is likely to be descending, so you can sell. You do not need much time to make a decision, following the rules is enough.

Sure, in the times of a flat, you will be getting the breakaways all the time and either be opening and closing too many positions bringing no profit or suffering a series of insignificant losses. However, as soon as a trend begins, the market will be bringing the prices farther and farther from the entrance point. In such a case, you simply need to move the SL and hold the profit until the market reverses and closes your position.

Pros of trading along with the rules

It can often be heard that a good system is no more than 20% of success on the market while the remaining 80% is the ability to follow the rules of money management and stick to your own rules in the hard times, which will happen periodically.

As Victor Niederhoffer used to say: "In investments, as well as in life, the question is not whether you will be knocked down but when it will happen and whether you will manage to get up and keep fighting. The risk of failure is an essential part of human experience which is especially visible on financial markets dominated by speculation, which is the readiness to accept commercial risks".

A huge advantage of such an approach is the easiness of market analysis and decision-making. The lines have crossed — we sell, the lines have crossed back — we close the position and open a new one. If we hand the method to other traders, they will see the same crossings and will sell the same way due to the signal lines crossing. What is more, the trader feels less emotional pressure as he leaves decision-making to the system.

Pros and cons of situational trading

It must be admitted that an experienced trader can show a better result in trading graphic patterns than someone who has just seen a pattern and is trying to use it. In other words, experience is critical here. If you practice situational trading, you will have to think a lot and sometimes make hard decisions, which is lacking in the systematic approach to trading on financial markets.

So, analyzing charts regularly on different timeframes and sticking to your own rules of trading, sometimes postponing open positions due to low volatility, may be very hard in the long run. What should the trader choose?

How to choose an approach for a trader?

If the trader is new to the market, systematic trading by strict rules might be the best option. It will spare them from excessive market entries without good signals as well as decrease emotional pressure during a series of losing positions. In the process of trading, the beginner will be moving along the stages of a trader's development to the top where they can use their experience for situational trading, getting rid of some strict signals of the system that has shown the worst results.

We should not forget that a good system is just 20% of the overall result: you have to master risk control and feel confident suffering losses and locking in profit. A sports car will not make a racer out of an ordinary driver; same way, for situational trading you need experience and knowledge.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

Dear traders!

This week, the ContestFX project, as usual, is waiting for everyone to participate in the following competitions:

The 145th competition of "Demo Forex" has almost reached its final.
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