Not every trader likes to use the “buy and hold” kind of strategy, where they hold on to a trade for weeks at a time. In fact, many traders like to scalp the market, where they enter and exit trades several times during the day. I can definitely understand why certain traders feel this way. The only problem I have about it is that most don’t take the time to really learn what they are supposed to be doing, before they start jumping in and out of the markets.
To begin with many forex scalpers (sadly) don’t know how to spot the trend. This should be the basics and many people just don’t know how to do it. I’m not saying you can’t have success trading against the trend, but your chances definitely diminish. It would be like trying to catch a falling knife by the sharp end instead of the handle. Sure, you might not get hurt, but you eliminate the risk just by using the handle.
When it comes to spotting the trend, I strongly encourage you to lose every single indicator that you are currently using. I know that sounds insane, but quite frankly you don’t need them. I know, I know… what about moving averages, MACD, stochastics, etc… The truth is all you will ever need is a simple bar chart.
Spotting a trend is as simple as reading from left to right. What are your charts telling you? In what direction is the price moving?
You can even use different time frames and compare the short and long term trends.
By: John Temp
About the Author:
John Templeton has been a successful forex trader after learning to day trade. Once he understood that all he needed to trade forex was on a plain chart with no indicators, his profits soared.
