What delivers lip smacking profits on a consistent basis within the forex trading world? Crystal clear analysis is the answer. Traders who can eliminate the clutter and get right to the underlying forex trend and market sentiment will almost always be in the money. In this article we look at some simple tips that can help focus your mind to analyse the markets with clarity and perspective.
Simple Market Analysis Tips To Deliver Better Forex Profits
1. Accepting The Unpredictable And Fluxing Nature Of The Forex. As human beings, traders would love the markets to be easily pigeon holed into very distinct and guaranteed market patterns and cycles. Do they sometimes? Sure. Do they always? No way! The first part of good analysis is to realize that it must be done in the broader context of leveraging high probability situations. Traders who understand that no bit of analysis can be flawless or infallible are likely to be more nimble in letting profits run and cutting losses sooner rather than later.
2. Analyze The News With Caution. News is a rather tricky and slippery little cog within the broader forex trading machine. News releases that impact forex markets are released daily – typically several times a day. These will typically hit the markets upon release to varying degrees, and the smart forex trader will beware of them (and often sidestep them). One of the trickiest skills for the forex trader to master is in having a policy and strategy in place that can react to the news, or at least accommodate the price turbulence it tends to generate.
3. Simplicity Works Best Within Forex Trading Analysis. The forex markets move at a remarkably quick pace. Unlike stocks which allow for in depth and complex fundamental based analysis models, forex trading needs fast analysis that is simple to understand and quick to execute. Forex trading isn’t an exact science – it’s simply the ability to grasp broader trends and the presence of mind to position within it with competence. Newcomers to forex trading would be well advised to implement a simple system that are kept to a few chart indicators at best.
4. Up Or Down? Here’s a simple trick that can really help us trade all time frames. Pull up a daily chart and take a close long look at how price is behaving. Draw a basic support and resistance line and a trendline – then ask yourself, which way is the market heading? All too often, forex traders can suffer from chart blindness when they over analyse a chart that has been cluttered with every indicator under the sun. Taking a step back and looking at the charts from a simpler viewpoint can sometimes help answer that very basic question – which way are the charts heading.
5. Ignore The Impulse To Trade Price Surges In The Forex Markets. From time to time, prices will rush up or down on the charts. This is often simply an over reaction to intensive news. Even if the trend is captured within the price surge, it can be a good plan to wait until the markets calm themselves before opening a position. Following the price surge (usually a vivid over reaction) the price will often retreat to a more realistic market level – at which point clever traders will move into the trade in their chosen direction.