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Technical Analysis Trading Your Way to Success in 4 Simple Steps |
Written by Sacha Tarkovsky
Saturday, 26 April 2008
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Many novice traders try and make money by FOREX Technical analysis and most fail as they don't understand its advantages or its limitations. FOREX Technical analysis trading can be very lucrative if you follow some simple basic rules so here are some simple rules that could make you a lot of money. Basic rules for technical analysis trading FOREX are: 1. Use a simple system This means support and resistance and a few filters - We like stochastics and Relative strength Index (RSI) to time trade entry and Bollinger bands to project targets and isolate areas of value. Don't: Buy a system from a vendor - you can't buy success. In most cases if the vendor made money he would shut up and trade his own money. Develop your own methodology, if everyone could buy success for a few hundred dollars then there would be a huge amount of winners in FOREX trading and there aren't! Only you can give yourself success you're on your own and that's the only place to be - All top FOREX traders rely on themselves. Don't: Assume the more rules you put in your system the better. It's a fact that most of the top systems are simple. There is no correlation between complicated systems and success. A simple system will be more robust and have fewer elements to break 2. Run profits and cut losses this way It's a fact you need to run your profits to cover your losses. Your system can make money only 30% of the time and still make huge profits if losses are a lot smaller than profits. The best way to achieve this is to trade significant breakouts (i.e strong support and resistance that is seen as critical by the market) stops are tight and profits from significant breakouts are normally huge. Fact: Most major currency trends develop from new market highs - so if you want to catch these trends, look up and research breakout methodology. It's simple to understand, works and will continue to work. Don't: Day trade FOREX! It will simply lose you your money quickly. Volatility is random in daily periods, so technical analysis trading is a complete waste of time. You will keep losses small and have plenty of them. Of course, profits from winning trades (that's if you get lucky) will never be enough to cover the losses you have taken! Don't: Trade to frequently. Be patient and ONLY Trade low risk high reward set ups. You don't get more money for trading more frequently - you get your payout for being right. 3. Take Open Equity Losses to get long term currency profits Currency trading is risky but most novice traders try and restrict risk so much they create it. Here are some pointers Stop levels if trading against support and resistance are obvious place them and forget about them. The major error most traders make is moving them to quickly and getting stopped out by normal market volatility. Leave the market room to breathe and don't trail stops too quickly. Its painful seeing dips in open equity in FX trading, but it's a great way to make big money from the big trends. Don't: Forget to place stop on entry be disciplined! Never trade with a mental stop Don't: Trail stop to quickly have a profit target and then tighten stops - Until then leave them way back. 4. Look Then Confirm Then Enter No FOREX trading method will work if you hope levels of support and resistance will hold. Confirm that support or resistance will hold and don't predict. That's why you have other indicators to gauge price momentum. Don't: Simply buy or sell into support or resistance and hope, it's the ultimate mugs way to trade. The above 4 points are critical to currency trading success by technical analysis trading - so use them. Article Source: http://www.ArticleBlast.com |
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FREE ESSENTIAL TRADER PDF'S AND MUCH MORE
On all aspects of becoming a profitable trader including features, downloads and some great FREE Trading PDF's visit our website at http://www.net-planet.org/index.html
FREE ESSENTIAL TRADER PDF'S AND MUCH MORE
On all aspects of becoming a profitable trader including features, downloads and some great FREE Trading PDF's visit our website at http://www.net-planet.org/index.html
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