You may have heard from various sources that very few people are truly successful in trading. While this may be true, do you know one of the main reasons why traders fail to make profits? It is often because they over-complicate their trading. There is a false belief that because so few people are able to make profits in the markets then it must be a complicated process. Since it is complicated, you must use many tools to predict price movement.
This is far from the truth. The over-complication of the trading process is what leads to poor decisions, frustration and failure. The truth is, the simpler you keep your trading processes and routines, the more likely you are to become successful with it. Please do not confuse simple with easy. You will need to have the proper knowledge on how to read price and anticipate actions taken by the market participants. This will become easier with practice and mentorship with highly trained instructors such as the ones at Online Trading Academy.
Looking at a typical novice trader’s charts, you are likely to see many technical indicators. These indicators are touted in nearly every trading book ever written. They are hailed as a better way to read price and have trading signals shown to you in a timely manner. There is a major flaw with this…they are all based on past prices and are delayed! You would always get a buy or sell signal after the optimal opportunity.
There is another problem with the traditional use of technical indicators. If they are widely promoted and used, then the professional, institutional traders know amateurs are using them and therefore know where you are likely to enter or exit the markets and worse yet, where you are likely to have your stops placed. Have you ever felt like there is a camera on your trading computer telling everyone where your trades are? There isn’t, but if you trade in a novice manner, your actions become predictable and vulnerable.
So how should one trade? Just like any other endeavor, you want to find out who is successful in it and mimic them. Traders on the floor and electronic institutional traders are concerned about one thing, price. You need to focus on price and see where the professionals are buying and selling versus the novices. Believe it or not, there are patterns that both groups leave in price charts. Buying and selling with the professionals and against the novices is the best way to ensure trading success.
Some of you who have followed my previous articles or have been in my trading classes may be tempted to call me a hypocrite because I do indeed use some technical indicators in my personal trading. However, there are two things you must realize about their use.
First, I do not use them as a decision making tool. I only use these indicators as a decision support tool. In other words, my decision to buy or sell is made based on price action. The indicator is simply used to help me filter out bad trades by indicating whether the level at which I am to buy or sell is more or less likely to work.
Secondly, I do not use the indicators in the same method as indicated in most trading books. As mentioned previously, using the indicators the same way the masses do would lead to the same poor trading results. I want to succeed just as you do, so I use the indicators in a different way that allows me to properly read price and support trading decisions.
In conclusion, keep your price charts clean and focus on reading price in order to increase your chances for trading success. To learn how to do this, contact your local Online Trading Academy office and enroll in a program that will expose you to the proper way to read price.
Neither Freedom Management Partners nor any of its personnel are registered broker-dealers or investment advisers. I will mention that I consider certain securities or positions to be good candidates for the types of strategies we are discussing or illustrating. Because I consider the securities or positions appropriate to the discussion or for illustration purposes does not mean that I am telling you to trade the strategies or securities. Keep in mind that we are not providing you with recommendations or personalized advice about your trading activities. The information we are providing is not tailored to any individual. Any mention of a particular security is not a recommendation to buy, sell, or hold that or any other security or a suggestion that it is suitable for any specific person. Keep in mind that all trading involves a risk of loss, and this will always be the situation, regardless of whether we are discussing strategies that are intended to limit risk. Also, Freedom Management Partners’ personnel are not subject to trading restrictions. I and others at Freedom Management Partners could have a position in a security or initiate a position in a security at any time.
Editors’ Picks
AUD/USD holds above 0.6500 in thin trading
The Australian Dollar managed to recover ground against its American rival after AUD/USD fell to 0.6484. The upbeat tone of Wall Street underpinned the Aussie despite broad US Dollar strength and tepid Australian data.
EUR/USD comfortable below 1.0800 lower lows at sight
The EUR/USD pair lost ground on Thursday and settled near a fresh March low of 1.0774. Strong US data and hawkish Fed speakers comments lead the way ahead of the release of the US PCE Price Index on Friday.
Gold pulls away from daily highs, holds above $2,200
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays near 4.2% after upbeat US data and makes it difficult for XAU/USD to gather further bullish momentum.
Google starts indexing Bitcoin addresses
Bitcoin address data is live on Google search results after users realized on Thursday that the tech giant started indexing Bitcoin blockchain data. However, mixed reactions have followed the tech giant's reversed stance on the cryptocurrency.
A Hollywood ending for fourth quarter GDP
The latest revisions put Q4 GDP at 3.4%, the second fastest quarterly growth rate in two years. Much of the upside was attributable to stronger consumer spending, yet fresh profits data affirmed it was a good quarter for the bottom line as well with profits up by the most since the Q2-2022.
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