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Ways To Better Analyze Market Data

4 Mins read

If you want to become a successful trader, then you need to start analyzing the market data! Understanding how the markets work is integral to any trader’s job, but many people aren’t sure how they should do it. 

That’s why we’ve put together this list of 13 tips and tricks on analyzing market data — so it’ll be far easier for you when starting!

1) Review The Daily Chart

The market’s daily chart is your priority when analyzing the markets. It would help if you looked at it daily while keeping price action trends in mind.

Once you’ve reviewed the charts, look for any important trendlines and see what levels they might be acting as support or resistance. Also, take note of any signs that might be present in the form of candlestick patterns or Fibonacci retracements.

2) Scan The 4 Hour Chart

The 4-hour chart is the next thing you should look at — and you’ll be looking for similar things to what you did on the daily chart. Review the price action trends, note any important trendlines on the chart, and inspect any candlestick patterns that might be acting as support or resistance.

3) Look At The Daily Relative Strength Index

Every trader should be keeping an eye on the Daily RSI. It’s a powerful indicator that can show the market’s health and is simple.

The RSI can also be used to identify oversold or overbought conditions, which is a huge advantage when trading.

4) Consider The Chart Price Ranges

The price ranges on the market’s chart are super important, and few traders note them. It would help if you always were looking at the chart’s price range and staying aware of it as the trading day continues.

The best way to do this is by using a custom indicator that can draw a horizontal line over these ranges. That way, you’ll always be aware of where the market is trading — and if there are any areas, you should avoid entering trades. Many MT5 forex brokers offer this kind of custom indicator as a free or paid add-on.

5) Be Aware Of Corrective Action

Most traders are too eager to jump into positions, leading to big losses over a long trading session. The market might move against you, so keep track of those corrections! You should always be aware that the market might turn against you and decide if your trade will stand on its own when the market reverses. 

6) Know The Performance Of Your Trades

One of the most important things you can do when analyzing your trades is to keep an eye on their performance. You should know how each one is doing — and how much money you stand to make or lose. If a trade isn’t going your way, it’s time to cut your losses and get out of there!

7) Follow The Trend

You should always be aware of the overall trend in the market. You shouldn’t get too greedy while trading, and try to time the entry and exit of your trades accordingly. If you notice that the market is in an uptrend, you should look for trade entries during short-term pullbacks.

8) Use The Market’s Strength To Your Advantage

On top of knowing the overall trend of your market, you should always be aware of when it’s at its strongest. It would help if you were looking for opportunities to enter trades when that happens, and that way, you’ll have your trades going along well in the market’s overall trend.

9) Set Your Close Longs At The Beginning Of The Session

One of the most important things you can do when analyzing a market is to set your close longs at the beginning of each trading session. That way, you’ll be able to limit your losses while still having them going well in the market’s overall trend.

10) Be On The Lookout For Important Trends

As you’re analyzing the data, you should also look for anything that could be a big trend. If you find something that looks good, don’t hesitate to get on board and start trading!

11) Know When To Exit A Trade

When should you exit a trade? That’s a very important question to contemplate, and it depends on your risk profile. Some traders are more aggressive and will exit when they see lots of resistance. Others will keep their trades open if they’re going well but remove them if they stop working out. 

12) Be Aware Of What The Market Is Doing

One of the most important things you can do when analyzing the market is to be aware of what it’s doing hourly. Once you’ve set your close long and close short positions, you should know what the market is doing. 

13) Be Aware Of The Support And Resistance Price Points

As you look at the data, you should also keep an eye out for any important price points. This can take multiple forms — and some people will be looking for a specific candlestick pattern that might act as support or resistance. 

FAQs:

Q. What are the 3 indicators for market analysis?

A. Market Breadth, Market Sentiment and Advance-Decline are the 3 indicators you should use for your market analysis.

Q. What is the advantage of using the RSI?

A. The RSI is a powerful indicator that can help determine whether the markets are at an overbought or oversold level. A downtrend is a clear sign that the markets are overbought, while an uptrend will give you an indication of when the market could be considered oversold.

Q. What are the 4 indicators that are most important for your analysis?

A. The 4 most important indicators you should be analyzing during your market analysis are the daily chart, 4-hour chart, 1-hour chart and hourly chart.

Q. What is the difference between a close long and a short?A. A long close position is when you decide to buy a currency pair at a specific price and close out at a later time. A close short position is when you decide to sell a currency pair at a specific price.

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