A frequent pitfall that I find in forex traders’ minds is continuing indecision about how to approach a trade. Many traders are afraid to jump into a trade without a plan of action, and this may be due to the ever present price movements that result from trading. If you are not prepared for a certain level of volatility and the associated price movements, it can result in a loss.
For example, one day your trading software shows a potentially losses because of volatility, and the next you see the potential losses declining. A day later your trading software may show potential gains due to stability. This scenario happens all the time.
A trader who is not prepared for a certain level of volatility will not be prepared for a lack of price movements. If you do not expect the price movements to take place, and in fact know them to be non-existent, you are less likely to be prepared for the unexpected.
It is this lack of anticipation and preparation that may result in some poor trading decisions. While this may lead to more losses, it also leaves room for improved learning when more trading experience is gained.
Pricing is an important element in trading. Pricing is also usually referred to as technical analysis. It involves the proper evaluation of price patterns, price trends, and the relationship between price patterns and other market elements.
I find it useful to keep a journal of my trading activities to identify trends in the currency markets. Whenever I feel a trend forming in my favor, I try to put some money into it to capitalize on the trend. In doing so, I am able to profit from trends.
These price patterns are a great tool to use. They indicate the direction of a trend, and even break it when it breaks.
Another form of technical analysis is called charting. Charting involves charting the movement of prices over the period of time of interest. Such charting could be a multiple-period chart, or a single period chart.
I find it helpful to keep a notebook of where I have placed the British Pound (GBP) in relation to certain market indicators. I then use this notebook to analyze past market movements and to spot new trends. I also use my notebook to identify technical trends, as well as technical support and resistance levels.
Charting is another way of evaluating price patterns and analyzing market movements. In this method, the price is represented by a line, and price is the indicator representing the movement of the line.
Price patterns may either be upward, or downward. I use price patterns to identify patterns and trends in the market and in doing so I am able to see what direction the market is moving in.
Sometimes this method of charting is used to determine how the market is moving, and sometimes the results are used to determine the profit potential. The results of this method are valuable to the successful forex trader.