Forex Charts - This Equation is Critical for Forex Trading Success

The equation in this article is the equation that makes market price move and if you don't understand its significance you are 100% guaranteed to lose and join the 95% of traders who lose their money, so here it is:

Fundamentals (Supply and demand news) + Investor Perception (the sum total of opinions = Price

IT MAY BE SIMPLE BUT:

Let's looks at how people don't stop to digest its significance when implementing their forex strategy.

We all have the facts - there for all to see but we all make subjective judgements based upon what we see (and we all see things differently) and the total mass of humans observing the facts is the price.

So what is the best way to trade?

Well first let's look at what won't work and a huge number of traders make the following mistakes and burn their equity.

- Any Method That Tries To Predict

If you try and predict you're hoping and guessing and you can't guess what a huge mass of traders is going to do in advance - you should only react to the price as it is.

Think of how many people try and predict by buying a dip to support and hoping it will hold - well if you rely on hope you lose.

- Any Method that Applies Science

Human nature is constant so markets so you can use scientific theories to accurately predict market movement - Wrong

Stand up anyone who follows Gann, Elliot wave or Fibonacci - they all claim they have scientific theories -but by definition a scientific theory should work all the time and none of the above do.

There is no scientific theory of market behaviour, because if the markets were scientific, we would all know the price in advance and there would be no market.

This is common sense! But many traders who show it in everyday life forget it when trading forex.

- Day Trading

So you can predict what millions of traders are going to do in the short space of a few hours - Really? Try it and lose, all short term volatility is random and you can't win.

- Trade Breaking News

Sure you get it in a split second but so to does everyone else and the fundamentals are instantly discounted by the price, so it is impossible to trade.

SO HOW DO YOU MAKE MONEY?

The first point to keep in mind is that forex trading is a game of odds - NOT a game of certainties but if you play the odds you can make a lot of money.

The best way for a novice trader is to ignore the fundamentals (these facts discounted instantly) and simply follow their affect by looking at the reality of price on a forex chart.

A forex chart however gives you something more - it shows you how ALL The participants view the facts, so by following and trading price trends you can profit.

What you need to look for are trends and execute trading signals in line with price momentum to keep the odds in your favour.

For example, you see prices dip to support (which you expect to hold) but you don't trade until you see prices turn away from support supported by price momentum

You then execute your trading signal based upon the reality of price.

Your not going to win every trade (remember were trading odds not certainties) but if you do it correctly you will win more trades than you lose and enjoy currency trading success.

A simple forex trading system is all you need.

Check support and resistance, execute on the reality of price momentum and use sound money management.

It may sound simple and it is - but you need to do your homework and be prepared to take losses as well as profits - but if you trade the odds you will enjoy long term currency trading success.