The Trading Forex Blog » discipline

Using Technical Indicators to trade Forex

admin — Sat, 05 Sep 2009 20:16:11 +0000

Did you know there are currently more than 100 technical indicators that you can use when trading Forex? Most charting software programs and packages available will provide all of these indicators to you — but the most confusing question is always: which ones should I use?

There is no magic in technical indicators in and of themselves as they each can tell you something about the market’s behaviour at any given point in time. Nor is it true that any one indicator is better than another.

What is key to using technical indicators successfully is to select only a few that complement one another and use them in an uncommon manner along with powerful trading tactics.

Most trading methods share the technical indicators they utilize for identifying potential trades — the key to being successful with these indicators is to understand their application and their impact on the selection of trade.

The tendency for many amateur traders, however, is to over-complicate this process. They want to use too many indicators or patters, and they think that success is dependent upon something being highly complex. Nothing could be futher from the truth — in fact, simple is better:

1. Using too many or the wrong indicators is counterproductive, as the information that those indicators provide is counterintuitive and just plain misleading.

2. Using a few simple indicators in a uniquely powerful way can provide the right information necessary to make good trading decisions.

3. With the right indicators and patterns, you will be far more likely to trade with discipline because you will be able to understand an objective set of rules that the right indicators and patterns can provide.

In short, you are best off keeping it simple and applying a smaller set of indicators to identify the best possible trades — and avoid making ‘complexity’ a qualifier for determining whether a method will work or not. You’ll likely find that the simpler the method, the more successful you’ll be with it.

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Learning to trade Forex – Learn To Trade It THIS way…

admin — Thu, 03 Sep 2009 15:49:51 +0000

Our research and surveys have confirmed too many new, inexperienced forex traders simply do not know how to manage risk in each trade. All too often, the result is the same: they wipe out their accounts.

This is what we find is happening. Forex has grown in popularity so quickly that many traders who are new to forex trading have just waded into the waters, opened an account and have begun putting on trades without any real thought or planning to how to approach trading.

It should be obvious that the problem with this thinking is little to no understanding of how to approach trading foreign currencies and the significant risks to capital that it poses. All to often, new traders try to trade first and learn second.

The result of that learning is the loss of some, or all of their account balance. Hey, let’s be honest, trading on a demo account is never the same as trading with real money. You do not apply the same emotional control, the same trading principles or rules, you can take greater risks with the demo account and you’ll playtoo safe when real money is at stake (often to your own loss).

You should be doing the opposite: learn first, trade second. In fact, across the board, the need to reverse people’s mindsets about forex is what is needed. Learn to trade the right way, and THEN take that knowledge to the market and trade with it.

The NUMBER ONE element to trading forex that new, inexperienced or unsuccessful traders should learn is how to FIRST MANAGE RISK in every trade they enter.

Today, one of the most well-respected names in Forex Training Courses, Bill Poulos, released a video that teaches traders EXACTLY how they should be trading forex. And, how traders can put more trades in their favor by erasing risk — it’s very cool thinking and it isn’t what’s being taught by most of the so-called ‘Gurus’ out there.

Catch the video here:

Forex Training Courses Video

Risk Eraser Video

By learning to manage risk FIRST, traders will find their trading transformed as they are able to approach forex trading with an entirely different mindset, a plan for erasing risk and a solid set of rules by which to trade.

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Forex trading: Why most amateur traders fail

admin — Wed, 02 Sep 2009 04:00:26 +0000

One phenomenon that derails amateur Forex traders time and time again is method complexity syndrome. They research a trading method, buy it and the minute they receive it, they jump ahead to what they consider to be “the guts” of the method. In doing so, they completely ignore all of the other aspects of trading, including risk management, discipline, and psychology.

They get into the “guts” of the method only looking for that big, mysterious, slap-your-forehead, jaw-dropping “secret” which will suddenly unlock the mysteries of the Forex universe and make them Master and Commander of every Forex pair. All too often, they find themselves completely disappointed or the “guts” reveal something they’d already heard about (but had not practiced). Amateur traders will then dismiss the method as ‘too simple’.

Or, the amateur trader will look for that complicated formula, cryptic combination of indicators and all too often what they actually discover is a set of simple indicators working together in an uncommon way, and they say, “Well I could have done that!” — and they become disappointed or frustrated, because they wrongly assume that any method MUST BE complex, it can’t possible be SIMPLE! So, they shelve the method or return it and complain that it’s “not complicated” enough.

This is a serious mistake – because the amateur trader will then repeat this error method after method and they will never take the time to learn and understand the full process of trading.

Don’t make this mistake. Understand that most trading methods out there are not complicated. They weave a smaller set of rules together in a simple manner (simple enough that anybody can apply them) but apply them in an uncommon way. Complex systems are for computer geeks and big banks — if you can’t understand something, you can’t possibly apply it.

Never skip ahead when learning a powerful new method for trading Forex. Make certain you learn the setup, entry and exit rules (which should exist in a good trading method); that you learn how to protect your trade with stops; and that you learn how to apply your method on a timely basis (be it hourly, daily or weekly) to get the most out of the method and to learn how all facets of what you learn work cooperatively to make you a better trader.

Remember, Simple but Powerful — using just a few indicators or rules applied in a non-textbook approach — is the key to getting an edge in the markets.

So many forex traders are NOT succeeding? Why? Today I had a conversation with Bill Poulos, I posed...