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Finding the Best Forex Trading Strategy

Finding the best forex trading strategy involves a lot of curiosity, a long learning curve, and nerves of steel. Quitters cannot take all that, and lose hope.

Commitment to Fulfilling the Task is Essential for Developing the Best Forex Trading Strategy

Foreign currency trading is so complicated, that most new traders tend to quit trading altogether after their first few failures. Not realizing what they are up against, and often not being in touch with reality. These traders end up coming close to but not actually finding the best forex trading strategy. The problems are many and diverse, but it all boils down to lack of determination and access to ordinary 9 to 5 jobs. Married men for example are always advised against taking risks in life, by their wives. So many new trading who were on the learning curve, end up quitting trading once they get married. Currency trading is risky at all times, even when it is very profitable it still carries some risk, and this flies in the face of having a stable, routine family life. Especially when one trades at considerable size. Despite this, there are some strongly family oriented people who are also very good forex traders. Getting through the long and often painful learning curve is the ultimate test for all traders. And success doesn’t come right away. As a trader learns efficient trading techniques, all that happens is that they are able to become marginally profitable at first. This is usually where traders make money trading but also give back much of the gains. Losing back 60% or 70% of the trading gains, is a strongly disappointing feeling, even more perhaps than pure losing trades. Because the trader has the feeling of having got too close but not being there just yet. And losing trades never quite go away, even when extremely profitable trading is achieved, traders still have losing trades. It’s just that the percentages have reversed by far, and they only lose back 20% or 30% of their total profits.

The Signs of the Best Forex Trading Strategy

The signs of having found the best forex trading strategy are confidence, feeling comfortable with losing trades and optimistic. Above all, the trader who is on solid profitable footing, knows that they can steadily recover all losses. That feeling alone, of knowing that you can recover previous losses, in whatever trading conditions, is what keeps traders determined, and fear is under full control. Trading forex for making a living requires having a positive attitude towards achieving goals, and being kind of a curious, single minded person. Very often, family and friends will advice against taking risks and achieving goals, but their reasoning is based on average statistical facts about other people. And there is a chance that they could be wrong this time on advising someone else. Because some people think in different, original ways, without repeating the mistakes others made in the past. This is very true in business start ups too, not just forex. Many new businesses were seen as failures in their early stages, only to prove critics completely wrong later on. It’s the same with the pursuit of the best forex trading strategy, outside critics are oblivious to the real facts.

Some Simple and yet Good Forex Indicators Traders Can Use

Traders can use simply forex indicators in slightly more complicated ways. So that there is no need go for the latest indicators, where ambiguity is greater.

Simple Forex Indicators Traders of All Levels Use

Forex indicators range from anything to do with momentum, price, highs and lows to many more formulas where the output graph is continuously plotted. Forex charts provide great insights into momentum and trend development. So the idea is to look for when great divergences occur between short term and longer term factors. Or for divergences between fundamentals and momentum. Both of these concepts can work in many time frames. The divergence between fundamentals and momentum is more long term, and much more difficult to figure out. But it is there most of the time. The global forex converter mechanism is such, that divergences of all kinds naturally develop, because the market is inefficient to some extend. Moreover we all know markets are volatile more or less, each day. This is because market participants cannot agree on price and find common ground. Divergences are simply the result of prolonged disagreement, where the market moves for a while on momentum, but some important data is not being priced in for a while. Inevitably, that data is fully priced in, and the market reverses, so as to catch up with reality.

Technical Forex Indicators

Technical forex indicators are oscillators such as RSI (Relative Strength Index), CCI (Commodity Channel Index), MFI (Money Flow Index), and more. The idea here is that at least one of these indicators will diverge relative to market price, and the market will, sooner or later, end up moving to the direction hinted by the diverging indicators. This technique works great on 30 minute charts or longer, and it helps traders of all kinds get advance warning for imminent price reversals. You don’t need to run any absolute numbers through your forex calculator to make use of these divergences. As they are simply visual divergences, and the market has the tendency to follow the single diverging indicator, and not the majority of other indicator that happen to be neutral or confirming recent market action. That is the magic of divergences, and it works on all time frames that are 30 minute based, or longer. Traders use more methods together with these indicators, so as to be able to pinpoint the exact time where the market will likely reverse. As indicators can only warn of a divergence, but they cannot provide precise timing. On the daily chart, some of these pinpointing techniques are based on high/low point analysis, and candlestick patterns. The Harami candlestick pattern is only one simple reversal pattern which may appear in such cases. There are many more, and all of them appear on the charts. Candlestick and high/low analysis is not reliable if one zooms in too much on the charts. Ideally, one doesn’t want to zoom in closer more than the four hour chart.

Learn Forex Basics and More for Better Trading

All serious people who want to learn forex basics for improved trading can do so. The information is available out there, the trick is filtering out the junk.

Learn Forex Basics for Better Trading and for Avoiding Mistakes

Many people who want to learn forex basics start with what is already available out there. The problem is that all this information contains a lot of junk and false information. Most mentors and educators teaching forex trading, focus on easy and convenient techniques, which many can learn. They also teach several false things, which make traders see markets the wrong way, and not the way they really work. Forex charts can be highly misleading, because they trigger all kinds of emotions on traders, and they lag fundamental factors in the market. The very idea that charts are accurate is actually wrong! Charts are accurate, but what they illustrate is momentum and the collective actions of the majority of traders. But that’s not the entire market! Fundamental factors can conspire in all kinds of peculiar ways. So as to allow a market to move on its own for a while, and then suddenly, out f the blue hit that market, creating all kinds of surprises. Fundamentals are so complex, that a single development or story, of fundamental nature can actually be both bullish and bearish, in a sequential way. So that the market rallies for few weeks because of this factor, and then declines in the next several months, again because of the same factor. New traders should be aware of this, and use their charts only as far as fundamental analysis would seem to suggest. And even fundamental analysis is often so ambiguous and inconclusive on market direction. At least the classic approach is so.

Learn Forex Basics and Trade More Pairs

When one sets to learn forex basics on various currency pairs, the whole market becomes much more flexible. And not a day goes by, without finding a nice trade. Generic trading techniques do not really work well in the forex market, whereas pair-specific techniques can do miracles. All a trader needs is more and more information, on as many as five different, totally different currency pairs. Five different pairs allow you to have plenty of trading choice every day and week, and still be a specialist in each one. Good trading starts with fundamentals, time zone selection, following possible patterns that the pair in question may follow and avoiding the news. All a trader needs beyond that, is to use their trading platform smart, make use of a forex calculator when necessary, and be ready to handle volatile markets. A big challenge arises when placing contingent orders, as the global forex converter mechanism creates so much and so weird volatility, that most stop losses are bound to be taken out in no time. There is no easy way around that, but to use larger and larger stops. As well as develop a suspicion for trades that are bound to become losers, and have them closed before they do. There is no one size fits all solution, to managing contingent orders. It is one of the hardest part of trading, but using larger than normal stops is a big step in the right direction. These are the habits of traders who tend to win big, and most of the time!

Getting Better Results From Forex Trading Online

Improving one’s forex trading online is always possible. Every trader has room for improvement and for taking new advice. All wise traders keep on learning.

There is More to Forex Trading Online than You Think

When traders carry out forex trading online, they usually follow on the footsteps of their mentors. But they all devise small or big new techniques, for improving upon what they learned in the past. The forex market allows for making such bold steps towards innovation and change. All you have to do as a forex trader is depend more on yourself, and less on your mentors and trading friends. Lack of initiative is bad in trading, and is often disguised and taught as discipline! But being very disciplined is actually a bad thing, as it prevents traders from thinking originally. This illusion comes from the belief that older traders are always wiser, and they know better. That is not necessarily true. Older traders may or may not know better, but they hardly ever give out their best secrets. In fact, those who are very profitable never give out secrets. The only advice they will share with you is some good but generic advice, which applies here and there. Forex trading online can improve dramatically only when traders start to think for themselves, and doubt other traders’ actions. Just because some experienced and profitable trader uses Fibonacci analysis to place their trades, it doesn’t do any justice to Fibonacci theory. It still is a nonsensical theory which doesn’t really work. Traders have to be logical and cautious, as to what advice to take from older traders and what advice to reject.

Taking Forex Trading Online to the Next Higher Level

Forex trading online can improve dramatically, by looking at what is different, unusual, and put it to the test. Are moving averages a good indicator? Are oscillator and chart patterns reliable enough, and if so on what time frame? These are the question an innovative trader will ask, and they will want to test out new things, in their own trading, and without telling anybody else. Some believe that in order to learn how to trade forex they will have to work as part of a team, always. While sharing and discussing techniques is a good thing, and may provide guidance, team work is not going to provide you with that unique trading edge. All profitable traders dedicate time to research the markets well, and they do this alone. For some hours at least, the trader has to think on their own, and in an original way. This is not compatible with team work at all. Because when we work as part of a team, we all look for nice ways for dealing with others, so as to make our answers fit expectations. But discovery is about fact, not tact. And when real research is going on, people tend to argue a lot, in a productive way. Sooner or later they all start to disagree, and end up working in isolation again. And people’s most creative moments actually come when working alone, in a quiet and stress free environment, usually at night. All the world’s really successful traders learned early in their career to think alone on their own, and to assess various trading techniques. While other people’s advice and feedback are always welcome, at the end of the day, it is a single mind that can figure things out.

Essential Forex Basics for All Traders

Essential forex basics are simple tips that all traders find useful in live trading. As independent thinkers, traders rely on facts, not public poll opinions.

Essential Forex Basics for Serious Traders

The main essential forex basics are about understanding reality and avoiding major mistakes in trading. Some of these include tips on not trading on the news, and not relying on economic report release times for day trading. Forex charts illustrate this point very clearly, as it becomes apparent that news and economic reports are impossible to figure out. And they are not 50-50 binary outcomes as urban legend has it. The entire forex industry is too focused on these news, for all kinds of reasons. And as a result many analysts write such daily analysis reports. But actually trading live, in these circumstances, it’s nearly impossible. N the other hand, day to day traders, and especially those willing to hold overnight trades, end up making most of the profits. Another basic tips on the forex market, is that market charts tend to work on momentum more than anything else. And there is a casual lagging phase between price action and fundamentals, ultimately, as a result of this weird phenomenon, the market is not always right, as urban legend once again puts it. If the market was right all the time, it would know everything that is going on, all possible information, and there would be no volatility involved. But charts clearly show all this volatility, and how sharply markets move when they catch up with fundamentals.

Forex Basics for Traders Willing to Do Better than Average

Some forex basics focus on the concept of using market indicators on interrupted mode, rather than the usual expected continuous way. The belief is that momentum and the developing trend are your friend, only in the beginning. But as soon as the trend matures, you will have to question all the momentum you see in the market, and look for counter, kind of trend-fading trade opportunities. Most profit opportunity occurs at reversals, and not when following an established trend. Veteran traders use time zones and candlestick analysis methods, for identifying the most likely reversal points. Time zones help identify the actual time where the market is most likely to move. EURUSD for example will likely move most during the New York session. So a move that EURUSD makes during the Asian session will likely fail and reverse. Candlestick analysis can help enhance such trading strategies by looking at 30 minutes charts, where several days worth of trading can be seen in a single chart. The global forex converter mechanism has revealed some patterns, which can help enhance trading. These patterns include the formation of highs and lows, and the duration of breakouts. But they do not include any fundamental insights. Fundamentals are more complex, and region and time specific for each currency. Fundamentals are what determine the real support and resistance levels, in terms of price zones, not thin trendlines. And they do work very well for determining how high or how low a currency can go. While most traders focus too much on charts and on their forex calculator, their support and resistance findings will be wrong. Only fundamental analysis can offer insight beyond momentum and into the real pivotal price levels.

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.