Forex trading is a highly risky activity, and this unfortunately results in a large number of losing traders in the market. In this article I’ll give you 3 tips that have helped me become a profitable trader...
Tip #1: Less Is More
Inexperienced traders often make the mistake of thinking that the more complicated a trading system is, the better it is. As much as this “logic” seems reasonable, it’s actually not true in the world of Forex trading.
For example: The more technical indicators you use, the more you’ll miss out on profitable trades. There are many good trading systems based on trending markets, and they typically use an average of 4 to 5 different technical indicators.
Having a system that’s too complex distracts you from obvious market trends and chart pattern formations. The human brain isn’t wired to handle too many sources of information at one time, so having a complicated trading system will often take your eyes off the big picture… I’ve often seen new traders suffer from such short-sightedness which led them into trading against the market trend. It’s an obvious mistake, but it’s a mistake that many traders still make today
Tip #2: Trading Is Not An Exact Science
Many traders expect market fluctuations to always follow a certain pattern: a pattern that mimics the human weaknesses of greed, fear, pride and impatience.
Although the market does reflect these emotions in price movements, the EXTENT of these movements are rarely similar. A piece of bad economic news may lead to a large, sustained fall in price, while a similar piece of bad news may only lead to a small and temporary sell-off.
You see, the market is subjected to its traders’ expectations, and these expectations change and evolve through time. While the emotions associated with trading are always reflected in the market price, WHERE they show themselves will differ. The same people who feel greedy when prices rise today, may not be feeling greedy again tomorrow when prices rise even further!
To learn more, download my free 26-page guide here:
"Forex Trading Traps!"
Harold Hsu is the owner of ForexSystemProfits.com where he provides premium Forex trading information and resources.
