If you are a Forex Trader than
you need to
liquidate losing trades quickly and run profitable trades to pile up
big long term profits.
Many traders don’t know how to do this and this section will
give
you some basics to follow and advantages and disadvantages of various
methods.
Day
Trading
Most novice traders try to catch trends in daily time frames than any
other method however, this method is doomed to
failure.
Fact:
The data within a day is totally unreliable and support and resistance
levels are meaningless. Volatility can and does, take prices anywhere
and all daily movements are random.
You
can’t get the odds in your favour
and you can’t win – PERIOD.
There are countless millions of traders, trading trillions of dollars
daily and it’s laughable to think that you can trade in such
a
short term time frame and win.
So
why do so many traders try it?
Well, it’s a good story and many vendors appeal to the greed
and
naivety of investors and try and sell them forex trading systems or
courses, but they don’t trade them! They make money from
selling
their product - they win by selling their product and the trader loses
in the market.
Don’t fall for the myth of Forex day trading!
Keep
in mind:You are
guaranteed to lose, as you can never get the odds in your favour.
Swing
Trading
Swing trading is perhaps the easiest way for novice forex traders to
learn a Forex trading system. The aim is to catch reactions in major
trends which normally last a few days to a week.
Swing trading has the advantage of there are plenty of trades to go for
and you know if you are right or wrong quickly. Forex swing trading is
easy psychologically, as you have obvious stop levels, small loses and
profits are generally banked quickly.
The key to successful swing trading is to spot valid areas of support
and resistance and then use momentum indicators, to execute trading
signals in line with shifts in price momentum. For example, traders
would wait for a test of support and for price momentum to turn up away
from support and then trade to the long side.
NEVER simply hope a level will hold or try and predict
as you will lose.
Advantages:
There are lots of trades, it can be very profitable and it’s
easy psychologically.
Keep
In Mind:
Make sure you don’t just guess or hope with swing trading and
you
use momentum indicators like ours to confirm your trading signals.
Follow
Long Term Trend
The most lucrative form of trading and also the toughest way to trade.
If you look at Forex trends you will very often see trends that last
for months or even years yet, very few traders have the mental
discipline to hold these trends and milk them for all they’re
worth.
Forex long term trend requires patience, to wait for and enter
these
trends when the risk/ reward is at its best and then have the mental
discipline to follow them.
Why
is it so hard to do?
Because most traders are not mentally prepared to accept big gains.
The above may sound odd - as surely all forex want big gains? The
answer is yes they do, but accepting them is another matter. The
problem is - if money is important to you (as it is to most
traders) then counter trend moves, which eat into your open equity, can
tempt you to bank a profit early.
Most traders get excited when they get a profit and the bigger it gets
the more tempted they are to take it, before it gets away. As
volatility eats into open equity the temptation becomes too great for
most traders and they bank early.
They end up taking an average profit or mediocre one, when they could
have had a huge one. If you are long term trend follower you need the
courage of your
conviction and tremendous mental discipline to ignore counter trend
swings and keep your eyes on the bigger prize.
Advantages:You
can make huge profits!
Keep
in mind:
You need to be patient when timing entry levels and you also need to be
able to psychologically handle short term severe dips in open equity.
You need to keep your eyes focused on the end prize - not the short
term swings against you. It’s
not easy to do but very lucrative.
Final
words
You can make money with all the above methods of trend and
the method of Forex trend you choose is down to personal
preference.
You can focus on one of the above - or combine all of them together in
your forex trading strategy and seek big profits in the worlds most
lucrative and exciting forex market – Good luck!
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