Reprinted Articles

With all the trading short-cuts that are now in the forex marketplace, people seem to forget about the first ever form of technical anaylsis, which is Price. I suppose traders are more interested in the shortcut.

All you have to do is look in any forex forum to know that’s true. Think about what you normally see in these forums. It’s always about some incredible system that’s covered with indicators or they are talking about a magical forex expert advisor that’s basically automating the process for them.

Can you tell what’s wrong with all of this?

For one thing, traders must understand that all these kinds of indicators, like RSI or stochastics, are only good for letting you know what has already occured. If you want the ability forecast future movements in prices, then i strongly recommend nor using these indicators.

Another important thing for traders to realize is that approximately 95% of all trades end up losing money. Since this is true why on earth would you want to be doing the same exact methods that 95% od the trading world is doing?

Think about this logically. Most of the forex traders you see in forums are usually struggling. If they weren’t, then why would they be in a forum? The successful forex traders are usually to busy paying attention to the market that they don’t have time to spend in a forum.

What’s bigger than ever now are these forex expert advisors. If you don’t know what a forex expert advisor is, they are basically automated trading robots. Developers are able to program a trading system using lagging indicators so that these robots trade for you while you’re not there.

You can see why this would be right up the alley of a new trader. After all who wouldn’t want the ability to come and go as you please. You can go anywhere you want and in the meantime this robot is going to make you rich, right? Actually that’s not the way it works.

Remember with expert advisors, you’re asking something from a computer that 95% of all the traders in the world can’t accomplish. Being that the forex markets are so new driven, do you really think that a computer is going to be able to quantify any kind of breaking economic news that comes out?

If you want to truly understand the reason why the market moves the way it does, it’s real simple. Less is more. Watch the EUR/USD for the whole day on a 30 minute chart without any indicators. Just follow the price action. I’ll never steer you wrong. If you focus hard enough, you’ll be able to see patterns that happen every single day. These are patterns that actually forecast the markets.

Last 5 posts by Jim Buhs

• Free PSP Games - What To Watch out For - August 17th, 2008

Tags: Investing