Many people try and base their forex trading strategy on predicting where forex prices will go but this is one of the biggest mistakes you can make in forex trading. You can win and enjoy currency trading success but you must not try and predict for the following reason.
Predicting the future is impossible and so is predicting forex prices and where they will go. Why? Because prediction is another word foroping and guessing and you wont make money doing that in life – or with your forex trading system.
TRADE THE REALITY
The way to trade forex markets is successfully to trade the reality of price change and execute your trading signal in line with it an example will make this clearer.
Traders will often look at an area of support and want they want to buy low and get their marketing timing right at the bottom. As prices approach support they buy and hope and many occasions' prices keep going and going through support and hit their stop.
You do not know if support is going to hold so do not try and predict!
The best way to trade is to wait for support to hold and turn away from the level ie it's been tested and has held.
How do you do this?
You need proof and the best way to do this is to look at momentum and use some momentum oscillators to indicate a trend change.
Good ones to use are:
The stochastic RSI, ADX, MACD etc
We do have time to cover these indicators in detail here, (simply look up our other articles) they will alert you to potential trend changes and let you enter the market when the odds are in your favor.
EXACT MARKET TIMING IS NOT POSSIBLE
You may say I Will miss the exact turn and yes you will but you could not predict that anyway so there is no point in trying. If you caught just 50% of every major move you would make a lot of money.
What you are doing is trading the reality and what you see on a forex chart and that's the way to get the odds in your favor.
TRADE THE BREAKOUT
If you want to know the best way of trading try trading breakouts.
It's a fact that most major moves start from new market highs NOT market lows and buying or selling new highs or lows will enable you to catch every trend.
Most traders want to get into these moves but do not, as there waiting for a pullback and a better price but it's a fact most of these major moves do not pullback – they accelerate away from the breakout.
If you learn to trade these moves, you're not predicting your trading the reality of a breakout and will be in on all major trends.
A MAJOR MISTAKE
Most traders get so obsessed with getting perfect market timing that they trade low odds set ups – They think buying just above support is low risk way of trading but they do not have the odds in their favor and lose. It's the same with breakouts – they think they have missed a move, wait for a pullback and never get in.
If they would have traded the reality of the break the odds would have been on their side.
TRADE THE ODDS AND WIN
Any successful forex trading strategy should be based around trading the odds and that's why prediction is doomed to failure – it looks low risk on the face of it but is anything but.
If you trade the reality and confirm your moves with your forex trading strategy, your chances of success are greatly enhanced and you can make a lot of money. Try and predict and your predictions will be as accurate as your horoscope and you will join the 95% of losing traders.