How To Learn Trading Relying More on Yourself

It is possible to learn trading by developing the skills to doubt market conditions. Instead of being a passive, momentum-following trader, lagging the market.

How to learn Trading the Hard… But Right Way

In order to learn trading the right way, you should get rid of all momentum based indicators, and only use them to confirm trends early enough in their development. Once a market trend has matured enough, all these momentum indicators become useless and misleading. All profitable trades who are really making profits from currency trading, without giving back much of the gains, rely on leading and peculiar indicators. Some momentum traders are actually profitable, but their currency trading is a tyranny. Because thy have to watch their trades every minute, thereby spending hours and hours at their desks, and incurring a lot of stress. Something which doesn’t seem very appealing when it comes to choosing a career. But even leading indicators are not like those prepackaged, easy to use indicators found on charting software. Leading indicators are complex, they follow the economic cycle, and their readings tend to have different meaning from one phase of the economic cycle to the next. Traders who made millions in the markets and who knew how to trade forex each and every day, were not day traders. In fact, they do not define themselves as being any kind of trader, swing trader, day trader etc. They focused on quarterly analysis first, then narrowed down their trading to each specific week.

Why You Cannot Learn Trading Based on Momentum

You cannot learn trading the forex market profitably on momentum, because momentum lags the driving forces that move markets. And you will be a step behind these forces, around 70% of the time. Momentum trading techniques are boring and lack the excitement of discovering new things. Momentum cannot predict reversals, and that’s where most big losing trades occur. Momentum is the result of the combined trading actions of many traders, it does impact markets in the near term, but the fundamentals always catch up sooner or later. In fact market momentum is so often wrong, that it creates all these false breakouts seen on the charts. This is the same as saying that following the trend is wrong, and most of the time it is! Trend faders on the other hand use a different logic, which is based on clues and leading indicators that the rest of the market participants are totally oblivious to. CFD commodity traders are among the most momentum fading traders, they do follow general trends, but only if the data is good. A CFD sugar trader or example, is happy to see sugar price plummeting, on momentum, and they feel happy buying a new low. Because the market fell on unforeseen circumstances, but the demand for sugar will not go away at that stage. Moreover their CFD trading platforms allow them to linearly hedge such trades, even for the brief period where they will have to keep open losing trades.