2Bull Forex Blog

Human nature is constant and humans decide the price in any market and many new forex traders as part of their forex education look to follow one of the many scientific theories to help them predict market movement and enjoy currency trading success, let’s look at them…

You will see lots of forex trading systems say they can predict market tops and bottoms with scientific accuracy but how accurate are they?

The major scientific theories are those based upon the works of Fibonacci, W D Gann and Elliot.

The above theories and any others that claim that markets move to science are wrong markets don’t and cant by there very nature.

Why?

Because humans are not logical and do not conform to a universal ideal and this should be pretty obvious as if there was a scientific theory of human nature we would all know the price in advance and there would be no market.

It’s a fact that if any of the so called scientific theories worked everyone would follow them and of course they don’t. Fibonacci, Gann and Elliot made no money with their theories but that still doesn’t stop the far out investment crowd claiming they work when they quite obviously do not.

Trade to Win By Trading the Odds

If you want to win at forex trading, don’t look for something that doesn’t exist and look at the right way to trade forex markets to win and that means trading the odds.

An essential part of your forex education should be that, forex is a game of odds NOT certainties. Don’t let this dishearten you though - if you learn how to trade the odds and use a simple soundly based forex trading strategy you can win and win big.

The fact is markets move based upon the supply and demand fundamentals and human perception of them. At certain times greed and fear take hold and humans push prices to far from fair value and a price spike occurs.

These short term price spikes are easy to see on a forex chart and can be traded for profit. Sure you won’t win every trade- but if you win more than you lose, keep your profits small and run your profits you can make huge profits.

Today science has enriched our lives and we marvel at some of the advances that are made. You can however only apply science in certain areas and forex trading is not one of them.

Keep It Simple!

Forex trading remains and always will be, odds based game and if you think about it 95% of traders lost 50 years ago and 95% lose today despite all the advances in science and forecasting.

Forex trading relies on a simple method and your ability to execute it with discipline through periods of losses to achieve currency trading success.

If you get the correct forex education and learn how to do this, you may not be perfect with every trade - but you will make a lot of money.

Forex day trading is simply one of the best ways to lose your money and the logic it is based on is absurd and common sense should tell anyone why it doesn’t work. Yet year after year day traders trade and lose using day trading methods. Lets look at why.

Before we look at why day trading doesn’t work lets first look at all the systems that supposedly make money on the net. They don’t make money in real trading though it’s all simulated made up track records using past data.

If you see a day trading system which claims that it makes money simply look for the following in the small print at the bottom:

“CFTC RULE 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown”.

The above disclaimer simply means nothing in terms of future profitability. Why?

Because if you want to make up a track record using past history - anyone can do that.

If we all knew prices in advance we would all buy the bottom and sell the top and never lose any money - in fact we would all be multi millionaires. Shame it’s not that easy though!

We have to trade without knowing what will happen and that really is a lot harder

Day trading is a good story and marketing companies know this so why not write some hyped up copy to appeal to greedy traders, make up a great track record and then sell it to the unsuspecting trader?

That’s what happens and time and time again the novice trader falls for it - He thinks he is going to make his fortune by handing over a few hundred bucks and then he gets his lesson in reality his equity is lost.

So let’s look at why day trading is a loser’s game

The reason day trading doesn’t work is that the logic it is based upon is absurd - think about this:

We have millions of traders, all with different motivations and forex trading systems and day trading is supposed to allow you to gauge what this vast diverse mass of emotional beings will do so you can enter trades on a tick chart?

Its common sense this cant be done and that’s why over the longer term day traders lose.

All volatility in daily time frames is random, support and resistance levels cannot be used and you cannot get a trading edge so you will lose.

If you can’t get the odds in your favor you will lose period

Avoid forex day trading unless you want to lose your money and lose it quickly.

Leave it alone and trade the longer term trends where you can get a trading edge and you can get the odds in your favor - Period.

If there is one basic mistake traders make and continue to make it’s the one in this article and if you make it you will simply lose all your money and do it quickly, so here is the forex chart mistake to avoid.

Lets take a look at this fatal mistake

The mistake is the forex prices can be predicted on forex charts.

No they can’t!

Of course if you are predicting you are hoping and guessing and that won’t get you far in any venture in life, let alone forex trading.

Of course there are many vendors who will tell you prices can be predicted with scientific accuracy and the naïve trader swallows it.

The most popular scientific theories are based around the works of - Gann, Elliot wave and Fibonacci.

These guys never made money with their theories and neither will you - because the fact that markets move at all, proves there is no scientific theory… If there were a scientific theory, we would all know the price in advance and there would be no market - common sense really.

Other forex traders predict but they don’t believe in scientific theories - their just trying to buy low and sell high and this doesn’t work either.

For example - a trader sees the price dip to just above support, assumes it will hold and executes his trading signal. Of course sometimes it works, most of the time it does not.

Rather than hoping guessing or predicting - you need to get the odds in your favour. Forex trading is a game of odds not certainties but get them on your side and you can make a ton of money.

The Way To Win With Forex Charts

Lets say you see prices dip to support you don’t buy you wait for momentum to turn up (you can read about momentum oscillators in our other articles) this gives you advance warning of a shift in price velocity and shows the level is likely to hold.

You can also use momentum to follow a break of support and trading breakouts is very profitable.

It’s a fact that most big bullish or bearish moves start from new market lows or new highs and by following the breaks with momentum on your side you can catch the biggest trends.

So remember:

The next time you see someone say they can predict market tops or bottoms with 90% market accuracy - you know their lying and that if you try and predict with your forex charts, you simply lose all your money and do it quickly.

Use your forex charts correctly. Trade the odds, confirm each move with momentum and enjoy long term currency trading success.

There is lots of forex education available free online and here we are going to give you some tips on finding the best that can lead you to currency trading success.

1. FREE Info

Most of what you will need can be found free on the net. Many of the e-books sold by vendors simply rehash what is found on the net and you can avoid paying for it by simply seeking out the right sources - search around and see what you find and you will stumble upon some good sources.

If you are your trading on forex technical analysis you can find everything you need to know about indicators and chart patterns to build your own trading system. For a novice trader this is the best way to trade, avoid trading news - it’s simply stories that reflect the losing majority, so avoid it.

Your aim is to trade the truth and simply follow price trends and everything you need can be found free - you need something more but I will return to this in a moment.

2. Expert Systems

All over the net claiming they can make you rich with mechanical systems and most will lose. Why? Because - they rely on clever marketing copy and simulated track records done in hindsight. If you see an ad that looks to good to be true pass it by, it is - has never been traded and simply put together by a marketing company.

3. Forex forums

I took a look around a few of the top forums before I wrote this article and my look confirmed by suspicion full of losing traders.

The guys giving advice are generally people who can’t make any money trading forex and it makes them feel better and big to give out their wisdom.

I have been a trader for 5 years and never bothered using forex forums and don’t think you should either.

4. The Edge

To make money you need a method and that’s easily constructed from free info on the net which we touched on in point 1.

You can easily build a system based upon breakout methodology, support resistance and a few momentum indicators and win at forex - just one word of caution:

Discipline

You will have heard how it’s essential in currency trading and it is but it’s very hard to acquire that’s why 95% of traders wipe out their equity quickly.

To ram home the importance of discipline, go to your local online bookstore and pick up some books by traders who have walked the walk, rather than simply talk the talk.

A few essential books are:

Market Wizards EDIT - Jack Schwager

This book interviews trading legends and lots of them and is one of the most popular investment books of all time and with good reason

The Way of the Turtle - Curtis Faith

This book tells the story of the turtles a group of 14 traders who became legends after learning to trade in 14 days and then earning $100 million in just 4 years.

The Disciplined Trader - Mark Douglas

A bit repetitive but rams home the importance of discipline better than any book I have ever read.

The three books above you can pick up for about $60.00 and their worth every cent.

They can explain far better than me my discipline is vital yet so hard to achieve.

Always keep in mind if you don’t have the discipline to trade your forex trading system, you don’t have one!

Trading looks easy yet few succeed - the ones that do build their own trading methods to get confidence which is the first step to trading with discipline.

Do the above get your method from free sources and the books above and you will have a head start on your way to learning currency trading the right way and get vital forex education, to help you win and win big.

Today, the internet and the power of desk top PC’s have revolutionized our lives and forex trading. Many traders are looking to computers and currency trading systems to help them make money and that’s what this article is all about.

Let’s first of all start with a rather startling fact:

20 years ago 95% of forex traders lost money and today the ratio remains the same - this is despite all the advances we have seen in forecasting software speed of news etc - the ratio still remains the same.

The fact is computers have helped us in some areas in terms of getting information and ease of use but computers are not the Holy Grail lets look at an example.

Neural Networks - Artificial Intelligence & Chaos Theory

Today the buzz words are neural networks, artificial intelligence and chaos theory and people build complicated computer programs around these theories.

Mostly these trading systems are clever but they don’t make money - Why?

Because they try and be too clever and have more elements to break than simple forex trading systems which have always worked best as there more robust.

Try this Simple System it’s FREE

My contention is that if you took a simple forex trading system like Richard Donchian’s four week rule ( which is free) and applied it ( look it up in our other articles) it would beat 95% or more of the clever over priced systems I have seen and this simple system is very simple - just 1 Rule!

Look at it and you will see why it works.

In forex you don’t get paid for being clever you get paid for being right with your trading signal- and that’s it.

Years ago in the 1990s I got talked into buying an artificial intelligence based program and to lease it in those days was $2,000 per month and I bought the story of it being based on NASA technology etc and it was beautiful in its presentation all sorts of indicators flying around the screen I had never heard of and it wiped my equity $80,000 out in 3 weeks!

If I had thought about it - it was simply based on logic that wouldn’t work and had too many rules but I was blinded by science.

So the moral of this article is computers make our forex technical analysis easier and save time - but they should not be used to create complicated systems.

Your PC is more powerful than the one that was used to land man on the moon - but it won’t help you beat the market.

If you want a computerized currency trading system to make money, simple systems are best and always have been and you should remember this and make it an essential part of your forex education.