Prices
move in trends and over 100 years of research has shown that those who
trade "with the trend", have often, greatly improved their chances of
winning in the forex markets (i.e., making a profitable trade).
Technical Analysis is the easiest and most precise way of trading the
FOREX market known by the forex traders community. All available
information on any particular currency, and its impact on traders, and
the market, are already reflected in a currency's price. The foreign
exchange market is mostly composed of trends and is, therefore, a place
where technical analysis can be used very effectively. Experience in
trading has shown that history repeats itself - over time, certain
chart patterns become consistent, predictable and very reliable. The
problem is being able of spoting them. There's always more than meets
the eye at first glance.
Prices move in trends; and the traders who don't know this fact
obviously have no need to implement a trading methodology on technical
analysis, they haven’t even realized yet. But, over 100 years of
research has shown that those who trade "with the trend", more often
than not, greatly improve their chances of winning in the forex markets
(i.e., making a profitable trade)
Many times finding the prevailing trend will help you become aware of
the overall market direction and offer you better
visibility--especially when shorter-term movements tend to clutter the
picture. And many times following the trend will bail you out of an
initially less than great entry point.
The main question you may be asking yourself by now is; how does
technical analysis help you to determine what the trend of the market
is and how does it help your efforts to trade with the trend and not
against the trend?
It is important to mention that no one is claiming technical analysis
as the “magic bullet” of trading . And if you ask, which indicators are
better in Forex trading? The answer is none - technical indicators
should simply be components of your overall customized / personalized
trading system and not systems in and of themselves. They are like
tools in a tool kit, not the kit itself!)/
As a Forex Technical Trader, your goals are:
#1) To figure out the price action of the currency pair. Price is the
main concern. If the EUR/USD is at 1.3226 and goes to 1.3219, 1.3112,
1.3008 - the market is in a down trend. Despite what every technical
indicator might predict, if the trend is down, stay with the trend.
Indicators showing where price will go next or what it should be doing
are useless. A trader need only be concerned with what the market is
doing, not what the market might do. The price tells you what the
market is doing.
#2) To always remember that technical indicators are only giving you
confirmations based on what the market is telling you. So listen and
pay close attention to the market and let it dictate which method you
will use and which tool you will pull out of your bag of strategies and
techniques. For only by listening to the markets will you ever be able
to conquer it successfully and become a profitable trader.
