In this lesson, we will introduce several basic technical analysis methods to help traders decide when to trade. First, we'll look at how to determine the risk-reward ratio before opening a trade, and then we'll discuss what support and resistance are and what they really mean to a trader. Also, we'll show you some simple graphs to illustrate the support and resistance conditions for a particular currency pair. Finally, we'll cover entry and exit limit orders, as well as so-called "stop orders". In the course on long and short trading, we will review the related concepts of long and short positions, and discuss how to open and close long and short positions reasonably to realize profit. At the same time, this lesson will lead you to further study and interpret K-line charts, and reveal to you the secret behind the K-line charts about investor confidence in the foreign exchange market.

3.1 Use support resistance to go long and short

Technical analysis focuses on finding the low and high levels of prices that may occur within a specific time frame. These points are often the low-risk entry points and high-yield exit points that everyone dreams of. And whether everyone chooses to enter the market at the expected low point or high point depends on whether we choose a "long" or "short" trading strategy. This lesson will help you understand what it means to be long and short, and what it really means to be long and short.

3.2 Use support and resistance to reduce risks and increase returns

Technical analysis indicators are the key to discovering and executing high-yield, low-risk trades. Whether you are using a daily, weekly or monthly chart or another time frame, these indicators will show the likely risk reward ratio of a trade. In this lesson, we will show how to choose trades with an acceptable risk-reward ratio (i.e. low risk/high reward trades) to achieve sound risk management, which is the key to long-term trading success for long-term profitability.

3.3 Support Resistance Chart - Japanese Candlestick Chart

Candlestick charts show a wealth of information for traders. A candle with a long body and no or only a very short shadow indicates that the market is not indecisive about the price. During the period represented by this candlestick, traders are mostly on the same side and the price will move in one direction. On the contrary, the short real body and long shadow line on the candlestick show that the opinions of traders cannot be unified. Prices are hovering around their opening levels, little changed after a lot of movement. In this course, we'll look at candlestick patterns and how entire sequences of candlesticks form patterns or combinations that show what the market thinks about a currency pair and what the price is likely to do in the future.

3.4 Pivot points

Pivot points are objectively calculated price levels derived from previous prices. They are widely used and the market expects these levels to act as support/resistance levels. Pivot points on daily charts are calculated from the previous day's price and are widely used by day traders. Monthly and yearly pivot points are calculated based on the previous month's and previous year's prices and tend to be used by longer-term traders. In this lesson, we'll see how pivot points are calculated, and how to use them.