4 Mistakes You Must Avoid When Trading Forex

Here are four of the biggest mistakes that cause 95% of newbie traders to loose.

1. Forex Charts Can Not Predict The Future

Although you will hear many traders say technical analysis can predict the future and afraid it is not true, it does however give you and edge, and advantage that over time will result in profit. If you ever hear of a system claiming to pinpoint moves in the market run a mile they will be telling a lie.

2. Trading The Intraday Charts

Trading is an odds game, the aim of technical analysis is to have the edge on your side and to do this you need as much data as possible.

One of the most common mistakes beginners make is to fall into the day trader's trap. Trading every single day on tiny market moves is possible but you have to know that each time you move down in time frame on your charts the less chance you have of making money!

3. Not Using Price Action To Confirm

Many traders will try to buy tops and bottoms based on what they think is about to happen. Stop, think about what you are doing, not only are you trading against the overall trend but you have no real evidence that the trend has turned. You would have more chance placing the money on your favorite football team to win.

Instead of gambling try using a confirming price pattern link the engulfing candle for your entry trigger. It will increase your chance of having a winning trade dramatically.

4. Using Too Many Indicators

I am sure there is not one trader who has not fallen victim to indicator madness, I believe it comes from the insecurity of trading. Traders tend to add indicators to there charts to give there trade justification, a reason to take a trade or get into the market.

Newbie's tend to believe that 10 indicators must be better than 1. Wrong, you would be far better learning one indicator very well, and sticking to it. Learn its patterns and relationship with price, learn how to read it without hesitation or the need for other justification.

A simple system will work far better than a super complicated one, you will not get rewarded in the forex market for being clever, you will get paid for being on the correct side of a move.

by:Dean Saunders