Forget day trading it simply doesn't work as the time period is to short. You can either follow long term trends and forex swing trade. The former has the biggest profit potential but requires plenty of patience and discipline and the latter sees trades come more often and requires less discipline.
2. Simple = Best
Keep your forex charting system simple - simple systems work better than complicated ones.
Why?
Because they are more robust and don't have as many elements to break.
3. Don't Predict
Many traders think they need to predict with their forex charts but prediction is doomed to failure - Why?
Because - you are hoping and guessing and this is not a good way to make money in any market - especially forex trading.
You need to confirm all your moves with price action. We will come onto this in a moment but let's first look at the basis of all good forex chartists systems.
4. Support and Resistance
If you don't know what it is look it up, it's an essential part of anyone's forex education.
All good forex trading systems understand it and use it.
You need to trade valid support and resistance. This means as many tests as possible ( but no less than 2) in as many different time frames and the wider apart the better. If it's valid, you can trade into to it and look for it to hold or break and catch new trends.
5. Confirm Don't Predict
For example - if you want to buy into support don't just jump in hope support holds wait for a turn in price momentum and use leading indicators such as ADX, RSI and the stochastic ( there discussed in our other articles ) and trade the reality of price change.
Don't however think of just trading levels holding look to trade:
6. Buy Or Sell Breakouts
It's a fact that most big trends start from new market highs NOT market lows.
While you don't buy low and sell high you do something that's very profitable you - buy high and sell higher. All the best forex chartists do this and you must to.
7. Be Objective Not Subjective
Ignore indicators that mean you have to make to many subjective judgements, go for indicators combined that give you a clear trading signal - NOT indicators like cycles Elliot Wave etc where your emotions could get involved.
The above are the bare basics you need to know when using forex charts and they should form the basis of your forex trading system.
Keep in mind keep it simple - simple systems work best are easy to understand and easy to apply and if you use objective indicators, you will keep your emotions out which are the enemy for most traders.
Forex charts can make you a lot of money, so learn how to use them the right way and currency trading success could be yours.
