Use Forex Charts For Risk Minimization and Better Trading

All kinds of foreign currency trading rely more or less on charts as well as on patterns and signals seen on those market charts. Day trading forex strategies rely even more heavily on market charts, and every minute of price action recorded on these charts is important to the trader. There are however some patterns that matter more than others. There are also patterns that might be irrelevant from time to time. Using market charts more selectively frees the trader from the burden of unnecessary observations.

Using Those Currency Pair Charts Efficiently

Efficiency is all about relying on one, or two correlated markets. And using forex charts on various time frames to see which patterns are relevant right now, which will be relevant tomorrow, and which will be relevant to later days. Some patterns simply contradict each other, and have to be ignored from time to time. Using various time frames can help make things clearer in that regard. Foreign exchange currency trading is all about being careful at time, and relaxed at other times. Being too focused at all times doesn’t work because it tends to overload the trader with all kinds of not useful, but still emotion-triggering information which is nothing but market noise. It’s kind of like working as a radar operator, which is a boring job. The operator has to be suspicious of unidentified targets, unusual behaviour etc, but they cannot investigate every single source of suspicion. Radars for example can easily be fooled by the enemy using fake targets, getting all the operator’s attention at the wrong time, while the enemy plans to attack from elsewhere. Hence for all the attention to detail and dedication of the operator, he can still fail. His attention to every detail can work against him. It’s the same with market charts, one signal may appear perfectly good and fast, making the trader think they have to act upon this signal. And then the signal proves to be false and the market simply moves in the opposite direction. So it’s critical to keep the balance and not overreact to every signal, because false signals are bound to appear. Whether one is a day trader, or a long term trader, they can only check the market as far as they can properly analyse it. Overwhelming oneself with tons of information and suspicion leads to confusion and no useful observations.

Traders attempt to focus away from market noise, and on the underlying trend as defined by the time frame of interest. The hourly trend may be down while the daily trend may be up and so on.

How Traders Deal with Routine Tasks

Wise traders have routine tasks to do, but they have found ways to make most of the tasks interesting. They know history doesn’t exactly repeat itself in the markets. Especially when investing in foreign currency for long term exposure, they look at geopolitical events, economic factors and things that are not routine and are interesting to read. Forex charts provide a basic roadmap, showing the forces of supply and demand and possible critical price levels. Traders and investors know that some of the observed signals will be false, so they take things slowly and without much stress. They also know that fundamentals and other unforeseen events can overpower past price history seen on the charts. Good traders see something unique on every chart, and not a routine task having rigid rules.