Trading forex means that participants engage into transactions in the world’s largest and most liquid financial market. Over $6 trillion exchange hands every single trading day in this decentralized market and unlike equity markets, the forex market is open for business 24 hours from Monday through Friday. This is one of the biggest reasons why forex trading has increased in popularity and attracted many retail traders from all over the world.

Currency trading requires reference points which are used to determine when to enter the market, place stops and take profits. However, many beginning traders divert too much attention to technical indicators such as moving average convergence divergence (MACD) and relative strength index (RSI) and fail to identify a point that defines risk.