Many people come in to the financial markets, whether it is forex, stocks or option trading and look for an automatic solution. A packaged commercial step by step way to make money easily without using your brain at all. Once they find that this doesn’t deliver the kind of results they expected or even the type of massive returns that they were led to believe were achievable they stop.
What happens next? Well – they find another automated process and guess what – this doesn’t deliver either. So they start all over again looking for another holy grail. Typically they will move on to moving from one indicator to another (all telling the same story) and even end up having 5 indicators on the same trading screen.
Don’t get me wrong – there is nothing at all wrong with indicators however they should confirm a move and not dictate it. Not a single indicator exists that will make a consistent return over a number of years in all markets – they help confirm a move and give a level of validation but they should not drive it. Forex robots do not work either.
In order to make money and achieve a decent level of success in the financial markets we DO need to follow a process that has all the main factors built in to them to form a trading plan. This includes good money management, looking at the trend in the higher time frame, good entry strategies based around price action and support and resistance levels and good exit strategies based around support and resistance levels and partial profit taking. Market volatility should also be in there as traders can’t make money from an instrument that does not move for days on end. For stock traders the market, sector and sub-group direction are also very important.
These are the main constituent parts that you will find in any successful traders bible and they should be the main parts of your trading template also.
Indicators should be used to confirm a move based around support and resistance levels and they all work to some degree however the bigger picture needs to be seen and the bigger picture is price. It doesn’t matter whether you use a an ADX cross or a hammer or shooting star candlestick pattern they are the tools that confirm the move.
So before you start your trading career don’t be one of those that is looking for the HOLY GRAIL for trading forex because it just does not exist!
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