Forex traders use a straightforward approach known as the 5-3-1 trading strategy to help them in developing the most effective forex trading plan for their trading preferences. The 5-3-1 method is very helpful for newbie traders who may struggle with the fact that the market is open 24 hours a day because there are dozens of different currency pairs available. Visit MultiBank Group
The interpretations of the numerals 5, 3, and 1 are as follows:
- There are five currency pairs that can be studied and traded.
- There are three forex trading methods that you need to master to be successful.
- There is one trading period every day, at the same time each day.
According to the 5-3-1 trading method, you should limit your attention to just five of the most important currency pairs. When choosing currency pairs, you should concentrate on the one or two big currencies that you know the most about. If you are in Australia, for instance, you have the option of trading in AUD/USD, AUD/NZD, EUR/AUD, GBP/AUD, and AUD/JPY. You can acquire a clear grasp of how the couples behave if you narrow your attention to just five of them.
Next, settle on no more than three distinct forex trading techniques. This restriction is valid regardless of the trading strategy you adopt or the technical analysis indicators you use.To narrow your technical analysis to the timeframes most suitable for your chosen indicators, it is recommended that you limit your trading plan to no more than three distinct techniques. Also, this prevents you from becoming bogged down in a sea of conflicting data from too many different indicators.
There are three distinct parts to the number three:
- You should start by settling on a trading strategy that suits your needs. It might be anything from news trading to swing trading to carry trading and more.
- Once you’ve settled on a strategy, pick a few indicators that complement it.
- In the end, choose on a method of risk management that feels natural to you.
Those that adhere to the 5-3-1 plan make one deal per day. The forex trading market is open nonstop, which is a major selling point. As a result of trading being available at all hours, investors have access to greater liquidity and more trading options. But if you don’t check in on your trading account regularly, you’ll miss out on possibilities, or the market could shift against you without your notice.
Once you’ve completed the first two steps, you’ll have a better idea of how often you should check in on your trades. However, this is also the time when you must be most diligent in putting your trading plans into action. You will be unable to follow your trading plan if you log in to trade a currency that has low liquidity at that moment.
The Crux of the Matter
When you open a demo account, you give yourself the opportunity to practice putting this formula into action using a variety of different currency pairs and trading techniques without the danger of losing real money. Log in to your existing account or create a new one if you are a skilled forex trader who is prepared to implement the 5-3-1 trading technique within your own trading. Know more Bróker de Forex, metales, acciones e índices | MEX Group