People who are trading in Forex think that they can trade the market better with technical analysis. It is a myth that traders have been believing for years. If you are investing your money in Forex and you want to make the profit, you should not use only technical analysis. Many people believe that if they are using technical analysis, they are more advanced than the other traders. If you are using only this analysis and not using the fundamental and sentimental analysis, you may be missing something in Forex. This article will not tell you that you should use all of the analyses in Forex. We will tell you how believing only technical analysis can make you lose your money.
It is not the Holy Grail
You have to know that technical strategy is not the Holy Grail of Forex trading. If you want to make money, you should all of them. Professional traders compare these strategies with the legs of a chair. If you are sitting on a chair and one of the legs is missing, there are chances that you will fall down on the ground. If you want to have a balance in your sit and have comfort, you have to use all of the legs. This is what makes the chairs stay in balance if you want to sit on. Traders who are using only technical analysis and think of themselves who are millions of light-years advance from the traders, they are not knowing they are only trading with the knowledge they know. Reading the currency pair, analyzing the market and knowing the trend, drawing some lines on your chart and chanting some of your strategies will not work. Technical analysis may sound good when you are using, this is not the Holy Grail. If you are using fundamental analysis, you will also need that technical analysis. Only one of the strategy in Forex is not good but it can be invincible when it is used with the others.
There are some professional traders in the options trading industry making tons of money just by using their technical analysis skills. But don’t think that they ignore the fundamental analysis in the financial industry. They use the fundamental analysis skills to find the strength of the market trend and based on that they place some good trades in the lower time frame. When you do your technical analysis make sure that you learn about the multiple time frame analysis since it is one of the best ways to filter the false trading signals in the volatile market. As a trader, you should always remember that the trend is your friend. If you try to trade against the market trend then you are literally increasing your risk exposure in the financial industry.
Use it when you need it
If you can make money with other analyses in Forex, there is no need that you have to use technical analysis. Traders can understand the market if they are trading in a disciplined way and if you can make money without technical analysis, don’t use it. Only use analyses when you need. Overanalyzing the market will make you slower in your trading.
Price action trading
Price action trading is one of the simplest ways to find the high-quality trading signal in any currency pair. Even the long-term traders at Saxo uses the highly reliable candlestick pattern to execute their trades in favor of the market trend. Being a full-time trader it’s highly imperative that you learn about price action candlestick pattern so that you can easily place trades at the key support and resistance level.
But learning all the details about technical analysis will not ensure your success. You need to trade this market after learning the art of proper trade management. Never take unnecessary risk to increase your profit factor.