Many novice traders make the mistake of thinking that forex prices move to scientific law - stand up the devotees of Gann, Elliot and Fibonacci - but of course they don't. If they did then we would all know the price in advance and there would be no market - period.
These traders are naive or lazy - what they need to understand is trading is a game of odds not certainties.
Leave the scientific theories to the far out investment crowd and dreamers and concentrate on the reality of making money - and that means trading the odds.
2. Trying to Predict
Even traders who don't use scientific forex trading strategies try and predict.
For example, they see prices dip toward support and buy - but this is hoping and guessing and they are going to get a lesson.
If you want to win you wait for the test of support and pfirs to move away from the level supported by momentum.
If you don't know what momentum oscillators are now is the time to learn and make them an essential part of your forex education - if you don't trade with price momentum, you are simply guaranteed to lose.
Look up our other articles for further details - you must trade with momentum indicators to get the odds in your favour.
3. Using invalid data
Day traders! All volatility is random in daily time frames and prices can and do go anywhere so you can't get the odds in your favour and you will lose.
More novice forex traders use forex day trading systems than any other method and it's the best way to lose money - Don't try it.
4. Using Indicators The Wrong Way
How many times have I seen people buy dips to a moving average? Loads of times and it's a guaranteed way to lose money - it's a lagging indicator!
Another great one is - traders using outer Bollinger bands to set stops - that's not what it should be used for, it's a gauge of volatility.
These are just two examples - but there are many more - always use indicators for what they are supposed to be used for.
5. Being To Complicated
Many traders think the more the better and try and use loads of indicators and complicated equations in their currency trading system.
Their wrong!
Simple systems using support, resistance and a few momentum indicators are all you need to succeed.
Why?
Because - simple systems are more robust and less likely to break in the brutal world of trading.
You don't get paid for being clever in forex trading; you get paid for being right - so keep it simple.
6. Being too Subjective
The more objective you're trading, the more likely you are to stay disciplined and keep your emotions out of trading.
Avoid using indicators that are subjective such as, cycles etc and stick with objective rules.
Finally ...
Using forex charts is easy and quick and you can soon be enjoying currency trading success, so long as you use them the right way.
When you use forex charts you are a bit like a ships captain - you can use them to navigate correctly but if you don't ,then just like the captain at sea who makes errors the market will drown you and your equity.
