Keeping Forex Simple
Posted in Psychology by Lewis Wolfe
Thursday, December 11th, 2008 12:56 PM GMT
Keep it simple (stupid) - if you do keep your trading simple, the point of it all is that you know where you stand, know what decision to make when faced with a set of circumstances and why you made it – all key factors in making the transition from rookie to professional.
And the obvious way to keep keep it as simple as possible at the beginning is to only trade one currency pair. Fewer variables, fewer moving parts, and a lot more chance for you to analyse charts, trends and trades with some accuracy. If you do try to handle 4 or 5 pairs at once, with all the major currencies involved, the individual characteristics of a pair, or even a currency, get lost in the blur of action. Learning the unique behavior of a pair is critical.
Individual pairs react differently to news events, show different patterns over the course of the trading day – for example, the opening of the London market has a significant effect on any pair involving sterling – and have to handled differently with respect to opening trades, risk evaluation and placing stops.
Once you’ve – hopefully – got some experience and mastery over a single currency pair then you have a base currency to work with – and that quite often means the one you’ve born with – and you have a base line. With this, you can start to work your way into understanding the mechanisms at work with other pairs.
Loading ...
[...] Financial 24 | World business, finance and economical news
Keep it simple (stupid) – if you do keep your trading simple, the point of it all is that you know where you stand, know what decision to make when faced with a set of circumstances and why you made it – all key factors in making the transition from rookie to professional. And the obvious way to keep keep it as simple as possible at the beginning is to only trade one currency pair. Fewer variables, fewer moving parts, and a lot more chance for you to analyse charts, trends and trades with some [...]