As a trader, you might be curious about how to
avoid fake signal which sometimes occurs. Just like learning to ride a bike, you have to fall many times before becoming proficient.
Similar to trading, you are often provoked by fake signals that end up bringing losses. Well, let alone beginners, professional traders can still experience losses because of the actions of this trickery thing.
False signals generally appear when traders are studying the market with technical analysis of various indicators and/or price action patterns. Such deceptive signs will tempt novice traders to open positions too early.
Later, the price moved against the position earlier and as a result, the pip gain became minus aka loss. You should be careful of those possibilities.
5 Powerful Steps to Avoid Fake Signal
Whatever your flagship trading and technical analysis strategy, here are 5 guide outlines to
minimize errors when you are facing the fake signs. So check them out.
1. Use a Daily Time Frame
Basic mistakes often occur due to the simple setting of the trading system as in the timeframe. The choice of timeframe determines the signal quality directly.
It is becaude the frequency of the appearance of candlestick bars (bars) depends on the highs and lows of the time lag. False signals will appear more often on low timeframes (below h4).
2. Understand where Support-Resistance lies
It is the second way to avoid fake signal. Before reacting to a sign, you should know where the support and resistance points are located.
This is important because of the repetitive nature of the market. The price will most likely bounce around that boundary point, except in the case of a breakout (the price moves far beyond the key support/resistance limit).
3. Be careful to News & Event
Be careful to news and event is another way to avoid fake signal effectively. High-impact economic news is able to move prices without warning from any signal in advance.
If you catch one during or around the time of the news release, it is very likely that it is no longer valid in following the volatility of the market. This is due to the volatile market sentiment during the high-impact news release.
Therefore, you can use the forex calendar to avoid market conditions with such a high level of volatility and risk. High-impact news will generally be marked with three-star marks, three bull's heads, red color, and other highest scales.
4. Reduce the Overtrading
Reduce the Overtrading is also goo to avoid fake signal. The danger of the risk of false signs will haunt if you are a trader with a desire to enter the market with a high frequency.
The Forex market is indeed among the largest markets with round-the-clock trading opportunities. No wonder many novice traders are always tempted to open a position whenever a signal from a price action indicator or pattern appears on their chart pair.
5. Avoid the inconsistent system
In general, beginner still do not have an established a system. They usually just copy and switch the systems of other professional just to make a profit.
The problem is, the understanding of one trader cannot be raw adopted by another. As a result, the novice trader actually got a false signal from the incorrect use of a system.
Avoid Fake Signal is Essential
Fake signals are actually a "natural" part of trading. However, each trader's experiences and skills will vary from one another in responding to these false signs. Don’t forget to choose the best forex broker only.
An option is like Didimax forex broker which is the legal platform. Besides that, it also has the low spread with competitive price which is good for all people.
The direct market access systems are also available. So, join Didimax right now if you want to avoid fake signal effectively and trade in a better way.