(level 8) Another 5 Ways to Avoid Losing Money Trading Forex
Trading Short-term Moving Average Crossovers : This is the money sucker of the century. When the shorter term moving average cross the longer term moving average it only means that the average price in the short run is equal to the average price in the longer run. For the life of me I cannot understand why this is bullish or bearish. Easy to set up on software, complete with lights, bells and whistles, and good for the seller getting thousands for the software but in terms of creating profit, its a zero.
37. Stochastic : Another money sucker. Personally I think this indicator is used backwards; when it first signals an overdone condition, thats when I think the big spike in the overdone currency pair occurs. To be overbought means strong and oversold means weak. Try buying on the first sign of overbought and selling on the first sign of oversold; youll be with the trend and likely have identified a move with plenty of juice left. So if %k and %d are both crossing 80, buy! (Same on sell side; sell at 20)
38. Wrong Broker : A lot of Forex Gen Broker are horrible; get a good one. Read forums and chats in several different places to get an unbiased opinion.
39. Simulated Results : Watch out for black box systems; these are trading systems that don't divulge how the trade signals are generated. A great majority of them are absolute garbage. They show you a track record of extraordinary results, but think about it - if you could build a trading system with half a dozen filters using the benefit of hindsight, couldn't you too come up with a great system. Of course going forward is an entirely different story. High-speed number crunching capabilities allows for building great hindsight trading systems; BEWARE.
40. Inconsistency : Every business (forex trading included) requires a business plan (trading plan). Unless you have taken the time to write down a set of rules that you can and will follow, it's likely your trading will remain unfocused and directionless. Make a plan, have rules, follow them, set goals that are realistic, and you will achieve them.
37. Stochastic : Another money sucker. Personally I think this indicator is used backwards; when it first signals an overdone condition, thats when I think the big spike in the overdone currency pair occurs. To be overbought means strong and oversold means weak. Try buying on the first sign of overbought and selling on the first sign of oversold; youll be with the trend and likely have identified a move with plenty of juice left. So if %k and %d are both crossing 80, buy! (Same on sell side; sell at 20)
38. Wrong Broker : A lot of Forex Gen Broker are horrible; get a good one. Read forums and chats in several different places to get an unbiased opinion.
39. Simulated Results : Watch out for black box systems; these are trading systems that don't divulge how the trade signals are generated. A great majority of them are absolute garbage. They show you a track record of extraordinary results, but think about it - if you could build a trading system with half a dozen filters using the benefit of hindsight, couldn't you too come up with a great system. Of course going forward is an entirely different story. High-speed number crunching capabilities allows for building great hindsight trading systems; BEWARE.
40. Inconsistency : Every business (forex trading included) requires a business plan (trading plan). Unless you have taken the time to write down a set of rules that you can and will follow, it's likely your trading will remain unfocused and directionless. Make a plan, have rules, follow them, set goals that are realistic, and you will achieve them.
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