Forex Trading

With all the trading short-cuts that are now in the forex marketplace, people seem to forget about the first ever form of technical anaylsis, which is Price. I suppose traders are more interested in the shortcut.

You can tell this is true by just going to any forex forum. What do you normally see people talking about? Usually its about some magical system filled with a bunch of indicators or a Forex Expert Advisor that basically uses those same lagging indicators to come up with an automated forex trading system.

Can you tell what’s wrong with all of this?

Well for starters, they need to realize that all the indicators like stochastics, MACD, RSI, etc…. are lagging. They are great for telling you what has already happened. It provides no ability to forecast future prices.

The other thing that these traders need to understand is that 95% of all forex traders lose money. If that’s the case why would you want to be doing the same exact thing that every other struggling trader is doing?

You also need to think about the fact that most traders on a forum are usually struggling traders. If they weren’t struggling why would they be on a forum to learn about trading. The real successful traders don’t really have the time. They are too busy trading the markets.

The real popular discussion on these forums are about the Forex Expert Advisors. For anybody that doesn’t know what these are, they are basically trading robots. Developers use trading systems with lagging indicators so that this robot trades for you, while you’re away.

You can see why this would be right up the alley of a new trader. After all who wouldn’t want the ability to come and go as you please. You can go anywhere you want and in the meantime this robot is going to make you rich, right? Actually that’s not the way it works.

Remember with expert advisors, you’re asking something from a computer that 95% of all the traders in the world can’t accomplish. Being that the forex markets are so new driven, do you really think that a computer is going to be able to quantify any kind of breaking economic news that comes out?

If you want to truly understand the reason why the market moves the way it does, it’s real simple. Less is more. Watch the EUR/USD for the whole day on a 30 minute chart without any indicators. Just follow the price action. I’ll never steer you wrong. If you focus hard enough, you’ll be able to see patterns that happen every single day. These are patterns that actually forecast the markets.