Mistakes Novice Make in Forex Trading

by : Kelly Price

There is one mistake made more often by novice traders than any other. If you make this mistake you will never win and never achieve currency trading success, lets take a closer look at it.

The mistake that most novice Forex traders make is:

They think that they must predict price direction in advance to make money - It’s a fatal error for the following reason:

If you predict you are hoping or guessing that the market goes your way. If you hope or guess, you are going to lose and lose quickly. You can win without predicting but let’s first look at why this mistake is made by so many fore traders.

The Myth Of Prediction

The myth of prediction is common and as vendors selling forex trading systems use it all the time - to appeal to the greed and naivety of traders and the main culprits are those that say markets move to scientific theory.

King of them is Elliot wave and Fibonacci numbers but there are many more who will tell you that you can predict market tops and bottoms with accuracy. Of course, if markets were scientific we would all know the price in advance and there would be no market. Markets move because of opinions and thats a fact and no one can predict these opinions with scientific accuracy.

If the people selling these systems had discovered how to do what they claim they wouldn’t need to bother you - they would be making to much money!

So How Do You Trade?

You don’t predict - you CONFRIM price momentum is going your way then trade. For example – You see prices moving to support, but you don’t just jump in and hope - you wait for price momentum to turn up above support and then execute your trading signal.

If you trade with price momentum on your side you are shifting the odds in your favour.

Two great indicators for doing this are the stochastic and Relative Strength Index – Look them up in our other articles if are not familiar with them. These are not only good for entering trades but also for exiting them as well and you need to use momentum indicators if you want to win at forex trading.

The biggest error a trader can make is trying to predict - always confirm and you will have the odds on your side, which will ultimately lead you to currency trading success.