2Bull Forex Blog

If you want to win you need to have the right forex mindset, this means taking on character traits that would be frowned upon in society - but in forex can make you a big winner. Here are the character traits that if you take them on could lead you to forex trading success.

1. Don’t Mix or Listen to Anyone

If ever you want to find forex traders who are losers visit a forum!

If you are a successful trader you trade in isolation and don’t listen or talk to anyone.

In society, know that since stone age times grouping together has been essential for our survival and it’s seen man survive and prosper. Were a social animal and seek the reassurance of the pack.

The problem is, if you start mixing and talking in forex trading, your emotions will get involved and you will lose.

Fact is 95% of traders lose, so you gain nothing from others. Stay away from others and be a loner.

2. No one Knows Better than You!

Today, we tend to consult advice about everything and call for an expert if your foxing your car great but is there such a thing as an expert in forex trading?

Maybe, there are people out there who will teach you to trade and give you forex education - but ignore the vast amount of so called experts who tell you they can give you success - they can’t.

All over the net, there are experts selling systems which have never been traded, new forex traders buy them and think there going to get rich - get real, no one can give you success, you have to work for it.

In forex trading you are on your own and you know best - arrogant?

Not at all, the fact is, in forex trading success comes from within and your on your own.

3. Make your Own Rules

In life were used to a structured society we know what time we need to be in work not to drop litter in public and to stop at red traffic lights but in the market there are no rules or structure and you have to operate in it.

This causes traders problems, as they have to take responsibility for their actions ( and most traders hate doing this, preferring to blame their brokers, friends or the cat!), they have to make there own rules to survive in the anarchy of the trading environment.

Your rules apply to you and you can do what you want - no one tells you what to do.

Finally

So there you have it you’re a loner, a know it all - you decide what you want to do without anyone else telling you or laws you need to obey. In normal society you would have no friends at best and get locked up at worst!

The fact is forex trading mindsets have to be completely different to our normal one and that’s why so many traders lose - they can’t change, if you can you can enjoy spectacular forex trading success.

If you want to make the really big money in forex trading then you need to catch and hold the longer term trends - here are two tips that will give you the ability not only to catch the big trends but also enter them with the best risk to reward…

Use Breakouts

This is simply the best way to catch the big trends.

All you do is look for support or resistance that’s been tested more than twice and if the time frames are wide apart - even better. The more tests and the more different time frames, the more valid support and resistance is likely to be.

All you do is wait for the break and buy or sell accordingly.

Most traders hate buying breakouts, they want prices to come back so they can get in at a better price but of course they don’t get in the market, the trend sails over the horizon and the trader who waits never gets in.

Breakouts are simple, effective and it can be very profitable.

The key is to focus on the really valid levels which have been tested numerous times and investors feel are significant.

There is no simpler or better way to get in on the big trends than to trade breakouts.

Getting In on The Trend Once its in Motion

What about if you miss the first entry level what is the best method to enter a trade?

Use Bollinger Bands

I personally don’t think Bollinger bands are the best tool to catch new trends (although many people do) but there an excellent tool for getting in on a trend once its in motion.

In strong trends prices will be volatile and be at the outer or inner bands - but they will dip back to the centre moving average and this is where you buy.

This works because its human psychology greed and fear push prices to far and then they fall back to fair value which is the moving average.

The middle band is a great place to buy or sell. Stops should then be behind the outer band.

Nice and simple, as trading should be.

Timing Your Trading Signal

On both the above methods you need to make sure you get the odds on your side, you need to check momentum before you enter the market.

You need to use some momentum oscillators to get make sure you have price velocity on your side.

There are many to choose from and there discussed in our other articles - but we love the stochastic.

We simply use bullish or bearish divergence to trade moves and that it.

There are many other momentum indicators but the stochastic is simply the best tool to timing market entry.

So if you want to catch big trends then make sure you learn to use breakout methodology and Bollinger Bands and finally, time your entry with momentum.

If you do the above your forex trend following could become very profitable and you can enjoy long term currency trading success.

What Is A Currency Pair?

A currency pair refers to the two currencies that are involved in a foreign exchange trade. For example, if you want to buy the Japanese Yen using U.S. Dollars, you would look at the quoted price for the USD/JPY currency pair (USD = U.S. Dollar; JPY = Japanese Yen).

Basically, the currency pair you should be looking at depends on the currencies you wish to trade in.

What Is A Base Currency?

A base currency is the currency that is first mentioned in a currency pair. In the USD/JPY currency pair for example, the base currency is the USD. In the EUR/USD currency pair (EUR = Euros), the base currency is EUR.

The base currency is the currency with which the quoted price refers to. For example, the quote USD/JPY 110.00 means that one unit of the base currency (i.e. USD) is worth 110.00 JPY.

To clarify, here’s another example: EUR/USD 1.4600.
This means that 1 unit of EUR is worth 1.4600 units of USD. To buy 1 EUR, you’ll need to trade in 1.4600 USD (i.e. sell 1.4600 USD).

What Are Bid And Ask Prices?

The base currency is traded at 2 different prices at any one time, depending on whether you want to buy or sell it. For example, if you want to sell the USD/JPY currency pair (i.e. sell the USD and buy JPY), you’ll receive 110.00 JPY. However, if you want to buy the USD/JPY pair, you may need to pay 110.03 JPY.

Notice how the buying price is higher than the selling price. This difference between the buy and sell price is known as the ‘spread’. If you first buy a currency pair and then immediately sell it, you’ll incur a loss equal to the spread.

The spread is what you pay to your broker as transaction fees.

One of the most popular methods of trading when it comes to forex is to identify and trade overbought and oversold positions. However is this really the best way to trade the forex markets?

If you’ve been a trader for any period of time you will know that it is extremely difficult to catch the top or bottom of a market, and to do this on a consistent basis is even more difficult.

Even technical analysis experts struggle to pick out tops and bottoms of trading ranges on a regular basis, and although they may get lucky occasionally, there will be plenty of other times when they’ve entered a position too early or too late.

It’s important to note that a currency pair, or indeed any financial instrument can remain overbought or oversold for a very long time, and may become even more so. Just because certain technical indicators signal a probable high or low has been reached, does not necessarily mean that this is the case.

For example, there may be several indicators such as RSI, CCI and stochastics, for instance, indicating that the GBP/USD pair is currently overbought and therefore ripe for shorting, but there’s still no reason why it couldn’t go 200 points higher into even more overbought territory.

Furthermore this is the case whether you’re trading short term or long term. Yes it’s true that forex pairs do conform fairly well to technical analysis, but there are always exceptions (otherwise we would all be millionaires).

The problem with this method of trading is that you are always fighting the trend, which is why I personally prefer to use methods that follow the overall trend.

However, if you do want to trade overbought and oversold positions, you can still go with the trend to some extent by waiting for a solid confirmation that a reversal is taking place.

This will mean that you don’t catch all of a move but you will have added confidence in your trade that a true reversal is about to take place when you do enter a position.

For example you could use crossover indicators like EMAs, MACD and TRIX for confirmation.

Anyway the main point I want to get across is that trying to consistently find highs and lows is a difficult way of trading which is why you’re better off either using a trend-following method or waiting for added confirmation if you do want to trade this way.