If you want to learn currency exchange then you need to work out which way prices are going and trade accordingly. Most traders think that they need to predict where prices are going to win, if you do this you will lose. There is a better way to make profits which is the subject of this article.
If you learn currency exchange and want to get an essential first bit of forex education then understand this point:
Do not predict prices act on confirmation.
If you try and predict forex prices, you are simply hiring and guessing and that is not a way to make money in any venture – especially currency trading!
You can not predict so do not try, simply learn to act on the reality of price momentum.
Before we cover this in more detail, let dispel one big myth of currency trading which is:
Forex prices move to a scientific formula.
Step forward theories such as Gann and Elliot Wave theory – lets ignore the fact that niether Elliot or Gann made money with their theories and state the obvious:
If markets were scientific, we would all know where prices were going in advance and their would be no market! Common sense really, but many forex traders fall for the prediction and scientific theories making it one of the largest myths of forex trading.
Let's take an example you need to absorb when learning currency exchange for profit.
For example, you note on your forex trading system, that prices are approaching important support or resistance – but you do not just jump in trade.
You want proof that the level is going to hold BEFORE – you execute your trading signal.
You do this by studying forex price momentum and watching for changes in momentum in line with the direction you wish to trade.
This is essential in any successful forex trading strategy and you need to learn how to do it correctly.
If you do, then you will be trading with odds on your side.
To see shifts in price momentum you need some indicators that can show you momentum changes.
If you are learning currency exchange for profit, then two of the best to use are the, stochastic and the Relative strength Index (RSI). Both will help you see and act, upon changes in price momentum and help you execute your trading signal in line momentum changes and put the odds on your side.
If you want to learn forex trading correctly, learning about and using momentum indicators is an essential part of your forex education.
We do not have time to cover these indicators in full detail here simply look them up in our other articles.
If you look at support and resistance and use momentum oscillators you will confirm the move and trade the reality of the change which will be clear on your forex charts.
No hiring or guessing – your trading the reality as it is and the change itself.
You may say that you miss a bit of the move ie the first part of the change but as you cant predict when this is going to happen anyway, so that's not a problem.
Always remember the old saying:
"A top or bottom pick soon becomes a cotton picker"
And it's true – you will lose your money and join the 95% of losing forex traders if you try and predict – do not join the losing majority, use momentum and get in the minority of winners.
The major lesson when learning currency exchange and trading for profit, is that currency trading is not a game of certainty – it's an odds game.
If you want to win at forex trading and enjoy currency trading success you need to keep the odds on your side and confirm each and every trading signal you execute, in line with price momentum.
If you learn currency exchange the right way, you will soon be spotting opportunities for profit with no guesswork, trading the truth and that's the only way to win longer term – PERIOD