Four effective rules to trade the bearish evening star

The bearish evening star is powerful sell signals. Though signals are based on the formations of the three different candlestick pattern and the pro traders uses it to execute short trade at the critical resistance level. Though bearish evening star offering high-quality short trade setups, still you should never risk more than 2% of your account balance. Try to follow the conservative trading technique since it will save your investment in the long run.

So, what is a bearish evening star?

The bearish evening star is a triple candlestick pattern which usually indicators the sellers have taken control of this market. The first candle is a strong bullish candle right near the critical resistance level. The second candle is a Doji or bearish pin bar which signifies indecision among the buyers and sellers. The third candle is a strong bearish candle which acts as a confirmation signal. Trading such patterns is extremely profitable but the rookie traders never understand the proper way to use this pattern. Let’s learn the use of bearish evening star pattern in four easy steps.

Trade the high time frame

You might spot the bearish evening star in the lower time frame but do you think you can make a profit in the lower time frame? Lower time frame trading is often considered to be the most difficult task in the trading business. Most of the false spike and trade setups are formed in the lower time frame. So, if you truly intend to trade the bearish evening star with an extreme level of accuracy, make sure you trade the daily or weekly time frame.

Trade with a premium broker

Those who are new to the trading industry might not have access to a premium trading environment. Without analyzing the market data in a robust trading platform you can’t find the best trades. Try to open the best Forex trading account so that you get free access to a robust trading platform like SaxoTraderPro. Once you have access to such a trading platform, you will get a precise price feed. Look for potential trade setups in the higher time frame so that you don’t have to deal with the false spike. Before you open a trading account, make sure the broker is highly regulated. Unless the broker has proven track record like Saxo, never open a trading account. Your success greatly depends on the quality of your trading environment. So, choose your broker very carefully.

Avoid trading the major news

High impact news is the most powerful price driving catalyst in the Forex market. Those who are new to this business often think news trading is the best way to make more money. Though this statement is true to a certain extent, without having enough experience, you can’t trade the major news. You should stay in the sideline before the high impact news release even though you might have a very good price action confirmation signal at the critical level. Wait for the market dust to settle and eventually you will get a premium quality trade setup.

Risk reward ratio

The new traders never understand the importance of the risk-reward ratio. They trade the market with negative risk-reward ratio and eventually loses a big portion of their investment. If you intend to trade the market, you must trade with a 1:2+ risk-reward ratio. Making money in the Forex market is a very challenging task. You have to entertain all the possible outcomes. Those who trade the market with a 1:1 risk-reward ratio, have to win most of the trades to make money from this market. But this is hard since no one knows which trade will hit the potential take profit level. So, if you trade with 1:3+ risk-reward ratio, your single winner can easily cover up to three losing trades. Learn more about risk management policy so that you can embrace losing trades regularly.

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