If you want to trade currencies you need to create a currency trading system and you can do this yourself it's a lot easier than most traders think and here we will give you 4 steps to create a currency trading system that can make big gains.
Here we are going to look at getting a long term trend following currency trading system together.
Spotting Opportunities
The first step in any currency trading system is spotting opportunities and here you need to look at the concept of support and resistance - it's easy enough to learn and if you don't understand why it's important there is plenty of free information on the net.
To keep the odds in your favour be selective in trades.
You don't get paid for trading more you get paid for being right and you need to make sure support and resistance are valid - at least 3 tests and the more the better. The wider the tests are apart the better too.
The next bit is the hard bit - will support or resistance, hold or break?
Next we are going to cover how to avoid the major errors that causes most traders to lose with their currency trading systems -make the error to and you will lose.
The first error, is trying to predict where the market will go. If you try and predict you will lose, as its simply another word for hoping and guessing and that wont get you anywhere in life, particularly currency trading.
Forget predicting and people who tell you it works - it doesn't.
The second error is trying to "buy low and sell high" which is actually related to the above point.
You learn it at school and it would be great if it worked in practise - but the fact is its again hoping or guessing, as in most instances, when you try and buy a low price momentum is moving against you and levels break more often than they hold.
This leads on to our next point.
1. Confirm the Move
For example, if prices move to support don't just jump in and buy WAIT For price momentum to turn around and go the other way - this is the reality that price is moving your way.
Sure, you have missed the bottom but as you can't judge where prices will bottom in advance that's not a problem. Catch 60 - 70% of a trend and you will pile up a lot of money over time.
So, you have support and resistance to watch and now you need to judge momentum. You can do this with a variety of momentum oscillators and two of the best are the stochastic and the Relative Strength Index (RSI) look them up.
2. Don't Forget Breakouts
You can trade into support and resistance but if they are new highs or lows they are breakouts and the fact is these are the best trends of all and you need to go with them.
Don't wait for the pullback to get in at a lower price - enter your trading signal and go with the break. These are the trades with the best odds and most people wait and remember most people lose!
3. Keep It Simple
You don't get paid for being clever or working hard in currency trading, you get paid for being right - that's it.
If you think that the harder you work on your forex trading strategy, the more money you will make then you are mistaken.
Simple trading systems work best as they are simple to understand, apply and are more robust in the face of brutal market conditions.
4. Stops and Targets
Stop levels are obvious, when you enter a trading signal and are dictated by support and resistance. The problem most traders have is they move them to quickly - do this and you will get clipped out by normal market volatility - if you are trend following keep them well back and trail them up slowly.
You may have to take dips in your open equity but that's simply the way it is so get used to it and keep your eyes on the bigger prize.
The above are the basics to consider when devising a currency trading system and its easy enough to do - the hard part is following a system with discipline but you can if you follow the points above.
Why?
Because you will have created it and understand how and why it works - this leads to confidence and discipline follows as a result.
Good luck with building your currency trading system - you can do it with a little time and effort and make some great forex profits simply have confidence in yourself and follow the above points.
Here we are going to look at getting a long term trend following currency trading system together.
Spotting Opportunities
The first step in any currency trading system is spotting opportunities and here you need to look at the concept of support and resistance - it's easy enough to learn and if you don't understand why it's important there is plenty of free information on the net.
To keep the odds in your favour be selective in trades.
You don't get paid for trading more you get paid for being right and you need to make sure support and resistance are valid - at least 3 tests and the more the better. The wider the tests are apart the better too.
The next bit is the hard bit - will support or resistance, hold or break?
Next we are going to cover how to avoid the major errors that causes most traders to lose with their currency trading systems -make the error to and you will lose.
The first error, is trying to predict where the market will go. If you try and predict you will lose, as its simply another word for hoping and guessing and that wont get you anywhere in life, particularly currency trading.
Forget predicting and people who tell you it works - it doesn't.
The second error is trying to "buy low and sell high" which is actually related to the above point.
You learn it at school and it would be great if it worked in practise - but the fact is its again hoping or guessing, as in most instances, when you try and buy a low price momentum is moving against you and levels break more often than they hold.
This leads on to our next point.
1. Confirm the Move
For example, if prices move to support don't just jump in and buy WAIT For price momentum to turn around and go the other way - this is the reality that price is moving your way.
Sure, you have missed the bottom but as you can't judge where prices will bottom in advance that's not a problem. Catch 60 - 70% of a trend and you will pile up a lot of money over time.
So, you have support and resistance to watch and now you need to judge momentum. You can do this with a variety of momentum oscillators and two of the best are the stochastic and the Relative Strength Index (RSI) look them up.
2. Don't Forget Breakouts
You can trade into support and resistance but if they are new highs or lows they are breakouts and the fact is these are the best trends of all and you need to go with them.
Don't wait for the pullback to get in at a lower price - enter your trading signal and go with the break. These are the trades with the best odds and most people wait and remember most people lose!
3. Keep It Simple
You don't get paid for being clever or working hard in currency trading, you get paid for being right - that's it.
If you think that the harder you work on your forex trading strategy, the more money you will make then you are mistaken.
Simple trading systems work best as they are simple to understand, apply and are more robust in the face of brutal market conditions.
4. Stops and Targets
Stop levels are obvious, when you enter a trading signal and are dictated by support and resistance. The problem most traders have is they move them to quickly - do this and you will get clipped out by normal market volatility - if you are trend following keep them well back and trail them up slowly.
You may have to take dips in your open equity but that's simply the way it is so get used to it and keep your eyes on the bigger prize.
The above are the basics to consider when devising a currency trading system and its easy enough to do - the hard part is following a system with discipline but you can if you follow the points above.
Why?
Because you will have created it and understand how and why it works - this leads to confidence and discipline follows as a result.
Good luck with building your currency trading system - you can do it with a little time and effort and make some great forex profits simply have confidence in yourself and follow the above points.
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