Using common sense in Forex trading can go along way toward your Forex trading success. Let’s look at a few tips that can help you along the way as you navigate the sometimes confusing world of Forex trading.
First of all realized that the market will only do one of three things. It will go up. It will go down. It will go sideways. That’s it in a nutshell, in reality it really is not more complicated than that. So now that we know the market will do one of three things how exactly can we use this information to help us profit in the foreign exchange markets?
What we want to do in order to profit in the Forex market is to correctly anticipate the future direction of the market. Notice the use of the word anticipate rather than predict. Anyone who thinks that they can predict the future direction of the Forex market is, in reality, simply anticipating that the market will move in a certain direction.
One of the best things about anticipating future market direction is that we don’t have to be right every single time in order for us to trade profitably. This may come as a shock to many people because they have seen so many commercially available Forex trading systems claiming to have ridiculously high percentages of winning trades. Beginning Forex traders have seen this so much, in fact, that they believe it is normal for Forex trading systems to have a winning trade ratio of 95% or greater.
In Forex trading you can have a winning trade percentage as low as 50% and still trade at a good profit. The main thing to remember is that in trading you want to build equity. To build equity, your total number of winners must be greater than your total number of losers regardless of the percentage of winning trades you have is part of the kind of simple common sense Forex knowledge that many beginners miss.
One of the most sensible things you can do to become a successful Forex trader is not to make currency trading more complicated than it needs to be. Once you find a Forex trading strategy that works well, stick to it and don’t let yourself be distracted to build long term profits.