subject: Understanding Fx Like A Professional [print this page] Many new traders find the Forex markets as a great opportunity because they operate without much interruption all day and night. There is almost no other market that a person can have a regular job by day and then additionally be able to have a dual career as a trader. Additionally, the currency markets are constantly in a state of change due to global news and economic events. This offers volatility and trading opportunities. One of the keys to successfully trading Forex is to not buck the existing trend.
Being successful in FX trading happens with discipline. It is always tempting to try to figure out a turning point in prices to get in at the very start of a new trend. However, this can and does lead to a lot of losses in your account. Assuming you actually do catch the top or the bottom, what are you using to place your stop loss order? Forex tends to trade off of resistance and support - both act like targets for currency prices in the absense of news events driving the prices. The best way to make money in Forex is to wait for a new trend to confirm the direction and then placing a trade in the direction of the trend. Once established, a good stop loss is a little bit below or above the recent support or resistance area where price turned the other direction. This daytrading method generates far more profits than trying to guess where the price will turn.
Another tip to successful FX trading is making sure you have a system in place to discover trade setups. Some people opt for forex day trading strategies that are fully automated. Most traders do not use fully automated systems and make use of a series of indicators and technical analysis to find trading ideas. Generally speaking, the more trading activity in your account the more indicators and technical analysis used. If you trade 9 time-frames and 5 currency pairs it becomes is difficult to follow that much information, while following a single currency pair is quite easy. It comes down to generating enough profitable ideas each day for the size of your account and level of risk taken.
One mistake many brand new currency players make is trying to find day trading techniques that achieve a very high percentage win rate. While this is a good thing to strive for, this does not always lead to to making money. It is quite simple to be 85 or 90% correct and still lose money. If you win 4 pips when correct and lose 30 when wrong, even at a 85% win rate you are going to lose money. On the other hand, a trader can obtain a low 30% success rate and make enormous profits if the losses are small and the wins are large.
