Forex Trading Can Be Simple

Forex Trading Can Be Simple! The first issue is a lack of self-confidence. This makes sense because being new to the trading world makes it easy to feel that you know almost nothing. The average new trader is constantly looking for “hints,” “tips,” and “tricks” when it comes to trading. This is easily understandable as they will know little about currency trading.

After all, sound trading decisions result from experience, and they will have very little of that. But, unfortunately, what many people don’t understand is that experience is often the result of bad decisions!

The lack of confidence will lead to system-hopping and constantly switching indicators and timeframes. The thing that is risky at this point is the trader very rarely understands how an indicator works. They know that you “buy when this line crosses the other one” or something like that.

Understanding the mathematics involved makes these indicators more effective in theory because at least the trader knows what they see. But, of course, at this point, they may have several hands on their charts, and this can lead to what is known as “paralysis by analysis,” which leads me to the other catalyst.

Forex Trading Can Be Simple

The other catalyst is simply a fear of losing money. Most traders go into the Forex markets looking to get rich, not understanding that you can’t always win. Yes, they know that a 100% win ratio is too much to ask for, but they don’t emotionally understand that. It is one thing to understand something from an intellectual level and quite a different one to understand it from a gut level. Taking a loss isn’t fun, but we all do it.

The “paralysis by analysis” syndrome comes about because of this. There is a point in the new trader’s career when they pile on the indicators to “read the markets.” They may start with a moving average and add a M.A.C.D. indicator as time passes.

Perhaps they have attended a webinar that featured the trader using the A.D.X. and Keltner Channels. At this point, they are starting to add the indicators to the chart and not seeing the most important thing: where the price is going!

Forex Trading Can Be Simple

With many indicators, it isn’t easy to understand where to go. For example, you could have three hands saying sell while another two are saying buy. At this point, the trader understands how difficult this is for them. But, unfortunately, they have made it overly complicated, and now it is getting frustrating–which can lead to foolish trading decisions over time.

Forex Trading Can Be Simple

Hopefully, they reach the point where one day they look at a chart and say something like, “Wow if I only had sold USD/CHF over the last few years. It has gone straight down over that time.” So while there are pullbacks, the trader sees they could have made a fortune selling this pair over the last several years.

Forex Trading Can Be Simple

This is where the idea of trading with the trend comes into play. Some traders will only trade in the direction of the overall movement and refuse to take setups in the other order. Of course, this takes patience when the pullbacks come – but it does work in the end.

While there are many different ways to trade, those who choose this method simplify many of the decisions they are forced to make as they already know what direction they want to be in. Their entries may vary from trader to trader, but they all tend to sleep a little easier at night. Forex Trading Can Be Simple

Some will debate: “The trend is up on the 15 minutes, down on the hourly, but also upon the weekly timeframes.” Nonsense. Currency pairs only have one trend, and that is the major one. The rest is noise; if you focus on that, you can avoid much trouble. If you are trying to determine the trend, look at a weekly chart and see if the market is going from the lower left to the upper right. If it is, you are in an uptrend.

You are in a downtrend if it goes from the upper left to the lower right. Anything that isn’t easily identified isn’t worth bothering with, as there are plenty of pairs to trade.

By approaching the markets this way, trading can be as simple as you let it be.