Forex Charts
5 Simple Steps To Gigantic Profit Potential
If you have read the section on Technical Analysis then you will understand that you can build substantial long term profits – but you require to use Forex charts correctly.
Here they will outline how to use for Forex charts in the correct way & the basics for building a successful Forex Trading process.
Using Forex charts is an art not a science.
1. Keep It Simple
Plenty of traders think that the more hard work they put in to their Forex trading strategy & the more complicated it is - the more they will make in terms of profit.
It’s a widely known fact that a simple Forex trading process with a few indicators, is more likely to be successful than one that is to complicated.
The above view is incorrect.
basically, a simple process will be more robust in the face of ever changing market conditions, as there's fewer elements to break.
Why?
2. Trade Valid Information
You require to trade information that is valid & can be used on your Forex charts to increase your odds of success.
Forex day trading causes traders to lose because volatility in short term time frames is random & can & does take prices anywhere. Support & resistance levels are meaningless & you cannot trade them.
The biggest error a forex trader can make is to try Forex day trading – it doesn’t work as the information is to0 short to be reliable.
3. Support, Resistance & Breakouts
Stick to either long term trend following or swing trading depending on which suits your personality.
All successful traders use support & resistance levels to enter & exit the market.
While traders like to buy in to support & sell in to resistance i.e. “buy low sell high”,
If you require to make money in Forex trading you require to buy these beaks.
most traders ignore a strategy that can be even more profitable which is buying a break of resistance.
Traders like to “buy low & sell high” when they miss a breakout, they wait for the pullback to get in at a “better price” but the price doesn’t pullback & they miss the move.
The fact is that most of the biggest money trends start from new market highs NOT market lows.
If you require to catch the gigantic trends then recall that - “buy high sell higher” is profitable - although its uncomfortable psychologically buying a new market high – it is a proven high profit Forex Trading strategy.
4. Use Momentum Indicators
One of the biggest errors traders make is to think that they can predict Forex price direction. If you try predicting forex prices, you are hoping or guessing & that is not the way to make money in any business – forex trading.
If you require to win at forex trading you require to learn to trade with price momentum.
than relying on hope – trade with price momentum.
For example, if you wanted to buy in to a support level – you would wait for a check of the support & price momentum to accelerate away from support & enter with momentum. This means you are trading with the odds in your favor & not relying on hope.
All the worlds top traders use price momentum as part of their forex trading strategy & you require to as well.
5. Be Objective Not Subjective
When using indicators to execute trading signals make sure you are as objective as possible. Avoid indicators that involve subjectivity & stick with ones that are objective.
For example, subjective indicators such as cycles, Elliot Waves, Seasonals etc & use indicators that fit objective rules. This will help you stay disciplined & Keep your emotions out of your trading.
Plenty of traders like to check their systems on back information & they look for perfection & finish up “curve fitting” which sees the process profitable in back testing but lose in realtime trading.
6. Back Testing & Curve Fitting
So what is curve fitting?
Curve fitting involves tweaking rules & parameters so that they fit the information, making the trading process profitable.
A lovely analogy is:
Shooting at a barn door, a then afterwards drawing a bulls-eye around every shot!
In forex trading, traders try & get or improve profitability by tweaking the process rules to fit the information. They add unique rules & parameters, for different market conditions & different currencies.
Of coursework, the forex market will move differently in the future & you can’t bend going forward so, the process collapses.
If a process is based on sound logic, it should work regardless of the market conditions or the currencies traded & should contain few rules or parameters.
Don’t try & bend the rules of any trading process to fit the information - it won't work going forward.
Obey the Rules of the Market
The market is all powerful & you require to obey its rules to enjoy success.
Respect the Forex market, use forex charts in the right way & you can pile up gigantic long term profits.
It’s similar to being the captain of a ship – your charts can help you navigate the ocean & earn a living but you require to be careful! If you use your forex charts incorrectly & break the rules you will lose.
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