Forex Education - Know your Plan of Attack

By: Harold Hsu

If you've spent some good time learning about how Forex trading works and how your competitors make it a dangerous game for you to play, you'll begin to develop a well-internalized fear of losing money. And that's a good thing. As a retail Forex trader, the odds of winning are heavily stacked against you, and a healthy dose of skepticism is required for you to develop a winning trading strategy.

Make Sure You First Understand The Market And Your Competitors!

This can't be stressed enough. Many amateur traders rush into planning their trading strategies without first understanding the crucial elements that influence the market. Don't make the same mistake.

Once you've familiarized yourself with the Forex market and the tendencies of your competitors, it's now time to strategize your plan of attack.

Plan Using The Right Perspective

Many retail traders take the wrong perspective when trading on their own. They read about chart patterns and technical indicators, and trade accordingly to what the popular trading literature teaches them. For example, popular trading literature teaches traders to sell when they see a 'double top'. And most amateur traders do exactly that.

But following popular trading literature is a big mistake. Why is that so?

Because the institutional traders know that retail traders are going to trade exactly according to these chart patterns and indicators; and they're going to use this information to exploit the retail traders. Haven't you noticed that you often get stopped out of your position just before the market moves in favour of your initial position?

That is not just a coincidence. It happens all the time. And it's the institutional traders who cause you to lose money.

So please pay attention to the perspective you're taking. When developing your trading strategy, you should do it accordingly to how the institutional traders act, because then you'll make money off the other retail traders like they do.

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