I’ve said it before and it bears repeating…
“With everything good in Forex comes something bad.”
I swear I’m going to put it on a poster someday. It’s true in life too, but Forex makes it really apparent.
But like in life, knowing how to guard against the bad (risk) to smooth out the good (gains) in a consistent upward motion, is what progress is all about.
The Trend Is Your Friend
So, we talk a lot, and I mean A LOT, about the “trend” in Forex.
Why? Because Forex is about statistics and probability. Seeing the trend, verifying the trend, and understanding what pullbacks (small reversals in direction) mean on your charts determine how and when to take (or to NOT take) a trade.
Anyone can set up a MACD and watch the candles rise and fall, right? Sure, you can bare-knuckle it with a super-basic chart, if you like counting the same things over and over… You’d better like it a whole lot, though, because you will be locked on your charts all day long. A solid set of indicators can save you a whole lot of time an energy.
That said, a basic kind of Forex 101 tip is not to only trade the one time frame you’re on.
You may be thinking, buy synthroid usa “What the heck, buy ambien 10 mg Russ? Of course I want to trade the 15m, 5m, or 1m. That’s where I’m comfortable.”
You can trade on any time frame you like, but a smart trader knows to check the next higher time frame to verify the current trend.
Why do we check the higher time frame? CONFIRMATION. The trend may be our friend, but the market doesn’t often make huge short-term swings, so if you want to trade the shorter time frames, you’re looking for small, consistent pip collection from trading those pullbacks.
Your much larger motion occurs in the greater trend (the one you confirm in the higher time frame). You almost never get a quick short-term trade signal for a long-term trade, and you could trade both sides of the trend, but understand you are taking on a lot more risk when you are trading short-term pullbacks.
Brute force and bare knuckles can get the job done, if you’re a fan of doing a lot of hard work.
A great system with indicators designed to find the pullbacks v. the larger trend lets you minimize risk and increase potential profits because at the end of the day, all successful Forex trades come from reading probability well.