Approaching The Forex Market Professionally

What are the characteristics of a professional approach of the forex market

? You must have heard people talking about that, but you may still feel confused. Well, the most important thing to do is to learn how to master yourself. Be patient and able to concentrate on the risks involved in trading instead of dreaming about millions. Always try to come up with a strategy which is more likely to bring you profits. This extremely important aspect may prognosticate the profit you could make over a lengthy period of time and for each single currency you trade.

It may seem strange to understand why it is so crucial to be patient while trading forex. Usually, beginners in the forex market are desperate to play with too many trades during a short period of time, mostly targeting quick results.

Their favorite trading charts are mostly those with a really brief time frame, which means they have the tendency to opt for the day trading, always in search for fresh and advantageous circumstances. Unfortunately, trading forex with such plans of attack may prove to be disastrous for them.

If they took some time to evaluate the statistics of the market, they would find out that generally, the results are extremely weak, not to mention the deceptive information associated with such movement. The levels of support and resistance are also weak and you must know that they are known to be critical pivot points. Anything can happen as long as fresh positions are likely to come up sooner than expected. The technical indicators appearing in the industry's charts lack effectiveness due to the fact that some of their primary characteristics are quite inaccurate.

A relevant example in this respect would be the recent situation of the Euro, extremely affected by the economic situations of a large numer of countries belonging to the European Union. This scenario caused a drastic fall of the EUR/USD during this last period of time. A fall of the forex market is easily identifiable if the trading charts would be analyzed taking into consideration the diurnal time frame plus. There will not be much evidence about the stalling of such vulnerability, even if you get to make use of a technical indicator, specific to the forex market.

On the contrary, if you take into consideration an hourly chart, there might be short-term price retractions which would allow you to open some new long trades. It is however essential to be aware of the risks involved in such actions due to the fact that you will actually be playing in opposition to a long-term trend.

Quite often, those who have no experience trading forex waste their time looking for trades which can generate low expectancy values. Hence, with some luck, they could come up with, lets say, a total of 60 wins, out of which $10 represent the average win and another $10 the average loss. This means that they are likely to win $2 for every single speculated dollar. In such a case a major loss is likely to happen, not to mention that the profit is insignificant as opposed to the invested amount of time.

When it comes to an expert in trading forex, he would prefer to make decisions relying on the statistics reflecting a longer period of time, not shorter than that one day. The result is a reduced number of trades, but of a much better quality. Let us say that they get to open no more than 10 trades in one month. These trades will change into 8 wins, out of which $100 representing the average win and only $50 average loss. In such a case, the value of expectancy would be $70, which is definitely much better.

by: JasonStander

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