Forex trading is a frustrating activity to most beginners. It is highly fluid and the non-stop flow of news and announcements can affect the technical landscape with bouts of volatility. Complex strategies may work well but they don’t work all the time and the user may also find that applying such complexities require discipline and well drilled execution.
Underlying the market is however a simple behaviour. The challenge is for the trader to build a set of rules to and apply them consistently.
FX trading is really just about buying support and selling resistance. It is easy said than done but here are some easy rules to follow:
- Follow the mantra of buy low sell high.
- Do not assume support and resistance even if there is precedence; let candlesticks indicate market sentiment at anticipated levels and act accordingly. When in doubt, let the market test and retest price levels.
- Apply a moving average as a simple visual way of indicating trend then buy support or sell resistance in favour of the trend
- Retail speculators often get the big picture right but get killed by volatility at the lower timeframes; increases chances of success by following the big picture more and this is really about 15 minutes or higher.
To sum it up, play with the trend, follow the big picture and apply wider stops that are more tolerant. That will really save you from a lot of nasty whipsaws but you will get it right when price reverts to the mean. In terms of strategy, nothing beats a simple one so you can get it right even if you wake up on the wrong side of bed.
