There one error that traders make more than any other when using forex charts and technical analysis and it ensures a wipeout of equity. This article will show how to avoid it and the best way to achieve forex charting success.
The most common mistake of all is trying to predict forex prices
Why?
Because if you predict all you are doing is hoping and guessing and that's not a way to make money in any venture in life least of all forex trading. What you need to do is forget about predicting forex prices and simply confirm every trading signal via price action.
The Wrong way to Trade
Many traders simply look at a support level or resistance level and as prices approach it they buy or sell. Of course a trend in motion is more likely to continue than reverse and more often than not the level gets taken out and the trader loses their equity.
The Correct Way to Trade
You need to get some momentum indicators to help you gauge price momentum. If you don't know what momentum indicators are look them up in our other articles but good ones to start with are:
Relative Strength Index (RSI) and the stochastic
These will tell you if velocity or strength of price is strong or weak.
For example if you are waiting for a support level to hold - you wait for the above indicators to prove that it has, before executing your trading signal. Sure you miss a bit of the move - but as you don't know where the turn is going to be that's not a problem. If you trade with confirmation, you trade with the odds on your side. Using momentum indicators for timing is essential, if you want to enjoy currency trading success.
And one final point:
Never ever believe anyone who tells you there is a scientific theory to market movement - there isn't. If there were we would all know the answer in advance and there would be no market!
Just remember
Trade with momentum, trade the odds and you will pile up big forex profits with your forex charts
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