This article covers the forex training you require to use the bigger picture strategy.
Many traders do not consider looking at the big picture when they are trading. When you deal with the big picture in trading you are not dealing with long-term goals, but rather the long-term movements of the market. Trading on the long-term movements is something that not all traders find appealing, but you need to consider what this is and how it can be accomplished.
Suitable Forex Training
Before you complete any type of trading you need to go through forex training. Trading on the big picture is no different and you do not need special forex training for this. The training you should complete is the average and basic training. Of course, if you pay particular attention to the use of moving averages and MACD histograms then you could find yourself with an advantage.
What is the Big Picture?
In forex trading the big picture is a long-term trend. A lot of traders look at using a short-term trend to complete day trading. The method of identifying the trend is the same, but you have to consider the longevity of the trend. With the big picture you want the trend to continue for a while so you can make the maximum amount of profits from them.
Looking at the Charts
Big picture trading is one of the long-term trading strategies that require a fair amount of technical analysis. There are two charting tools that you can use when you identify the trend you are going to trade on. The two tools are moving averages and the MACD histogram.
The charts you should be looking at are the daily or weekly charts. This type of trading is extremely long-term and you could be holding the position for a week or more. When you use these charts you are not going to be looking for exact entry and exit points because this is not part of the strategy.
The first tool you should apply to the chart is the 12 month exponential moving average. There is some debate about the use of a moving average for this, but as yet there is nothing that can replace this. The main disadvantage is the fact that it is a lagging indicator and is susceptible to false indicators.
The second tool you have to apply is the MACD histogram. This tool is able to give you an indication of the strength of the trend. The parameter values of the MACD histogram should also be long-term and not the average defaults. The exact numbers that you use will be down to personal preference and what you find works.
Forex News and the Big Picture
One of the indicators that you should use is fundamental analysis. If there is a high impact news release for the currency pair you have to take note. You should focus on the high impact releases that will cause a long-term trend. The news that causes this can vary depending on the currency pair you are looking at, the market conditions and the market sentiment.
It is important that you first test this strategy on a demo account before you use it. As this strategy is not ideal for everyone you may not be comfortable with it. There are also certain things that you may want to change like the parameters for the MACD and moving average tools. Before using this strategy you should understand it completely and ensure that you are comfortable using it.