2Bull Forex Blog

Consider this - everything about forex trading can be learned yet, 95% of traders lose money so if this is so what is the obstacle to success? This is the subject of this article.

The obstacle to success in forex trading is you! This might sound odd but it’s not, because while the information about how to successfully trade is available applying it requires mental discipline and most traders are unprepared for this. Further explanation will make this clearer.

You can learn a method in just a few days. We would suggest a simple one based upon breakout methodology and we have covered this in our other articles, so simply look them up.

One point top make clear is - simple methods work far better than complicated ones, as they are more robust with fewer elements to break.

Do not be duped by people trying to sell you complicated methods or “sure fire” / “holy grail” trading robots - build your own.

Now you need to think about this equation:

Simple Robust Method + Disciplined Application = Forex Trading Success

If you don’t have the discipline to apply your method you don’t have one! Now trading discipline is achievable but it’s not easy to be disciplined, so you need to make sure that you note the following points.

You Need to Know How and Why Your System Works

If you don’t, you will never have the confidence in your system to follow it with discipline.

Without confidence you wont have discipline, its as simple as that.

This may sound obvious but to many traders think they can blindly follow someone else and win and of course as soon as a few losses occur (and they will) they throw in the towel.

Even if you follow someone else, you must know how and why the system will win and have confidence to follow it with discipline.

You also need to keep in mind you are going to look stupid at times as the market wrong foots you - but if you are disciplined take your losses and run your profits, you will be trading the odds and win over time.

The fact is 95% of traders lose and as we said at the start of this essay, they don’t fail because they cant learn - in most instances they fail because they learn the wrong knowledge or don’t have the discipline to apply it.

Learning the right knowledge is easy, having the discipline to apply knowledge is much harder.

You have to create your own set of rules and apply them for long term forex success - if you can do this you can be a winner.

Forex trends occur all the time and a glance at any forex chart will show you them but making money from them is far harder, as you have to employ correct market timing and risk control. Here we are going to show you how to forex trend follow the right way for big gains.

What time Period?

Here we are going to look at the big trends and these typically last for months and some last for years, as they reflect the health of the underlying economy.

Lets look at how to enter existing trends and execute trading signals correctly.

Bu far the best way of doing this is to but or sell breakouts, to new highs or lows and dips to value areas.

Buy New Highs!

Most major trends start from new market highs not market lows.

When a price breaks out you go with it. It may not appear that you are getting the best entry point however you are trading with the odds in your favour and valid breakouts tend to give big price moves.

Many traders make the mistake of not doing this and waiting for a “better price” to occur on a dip - but breakouts tend to accelerate away, never dip back and the entry and big profit is missed.

The more times the resistance has been tested and the wider these tests are the more valid it tends to be and 3 tests is a minimum.

Buying Value Areas

If a breakout does not occur, you can wait for a dip to occur and in longer term trends you always have them, as prices become over bought or oversold and then come back to longer term value.

Here you can use a simple moving average supported by momentum to confirm the move.

In currency trading we love dips to the 20 and 40 day moving average to initiate new positions. You simply wait for the dip and use momentum indicators to show that momentum is turning in the direction of your view - then enter.

NEVER try and predict in advance - act on the reality of the change in momentum and you will have the odds in your favour. Try and predict and you are really just hoping and guessing and will lose.

Forex Trend following involves patience and making sure that you are getting in at the best price in terms of the risk reward.

The above two tips will help you do this.

Many traders like to catch or predict where highs and lows will be and be perfect - but you cant do this so don’t try. If you could catch just 50% of all major trends you would be very rich and this is the aim of forex trend following.

Look at a chart and practice using breakouts and buying to 20 and 40 day MA and you will surprised at how effective and profitable these simple tools are; in turning forex trends into big profits.

The idea of a forex robot is simple to give you an automated set of rules you can apply for bigger profits. No thought is required you just follow the rules and this makes forex robots time efficient and means the profit potential of forex is open to Anyone. Let’s look at a FREE one that could make you huge profits.

Before we start most of the forex robots sold online will not make you money.

They all have the warning below written near the track record, normally in small print! Make sure you read it and digest its implications:

“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”.

Now you will see why there a waste of money in terms of buying them and what they will do to your equity! They haven’t even been traded and are simply simulations knowing what happened and that’s easy.

So let’s look at a free one that works and its - Richard Donchian’s 4 week rule.

It simply says:

When prices make a new 4 week high buy and when the price makes a 4 week low sell.

How simple is that?

Very - but don’t confuse this with not being able to make money.

Test it and you will see its very effective.

It’s been used by some of the great traders and trading legend Richard Dennis was a big fan and if it’s good enough for him, it’s good enough for you.

It was developed for commodity markets and is essentially a stop and reverse SAR system and works very well on trending markets - but in periods of consolidation like all trend following systems it will incur loses so you need a filter.

A good way of doing this is to alter the exit and make it one or 2 weeks then re enter on the 4 week rule. You can also use moving averages as an exit.

Either way, with filters or without this system will make money but you have to decide what drawdown you are comfortable with.

Why is it so successful?

- It’s based on breakout methodology which is timeless way of staying with trends.

- Currencies trend well and you will never miss a major trend

- It is robust, simple, easy to understand and easy to apply.

So there you have a forex robot that will work but most traders won’t even bother with it despite its obvious money making capacity why?

It’s too simple and they don’t believe it will work, it’s not fussy about perfect entry, it doesn’t trade that often and of course it’s not trendy. However, if you want to make money and have discipline you will love it.

Simple forex trading systems work better than complicated ones, as they are robust and have fewer elements to break, so don’t be deceived by its simplicity - this forex robot works, is free and could make you a lot of money.