How To Apply The Right Trading Tools in The Forex Market

1. How To Apply The Right Trading Tools in The Forex Market When trading the financial markets, one always faces the dilemma of whether to enter a trade or pass on it. Some forex traders use their “gut feeling” to make this important decision. This instinct or intuition that some feel they have is more-often-than-not based on two principle emotions: greed and fear. Greediness will push traders to open a trade, while fear will hold them back. In either case, traders In either case, traders– regardless of their experience level – should use more than their gut feeling to make these decisions. More knowledge is required to have a sound trading system to rely on in the forex market.

2. Trending Forex Market Trending Forex Market During a market trend, everybody enjoys the ride and sees an opportunity for potential profits to grow. Whether it’s a downtrend (denoted by a consistently downward pattern on the price chart) or an uptrend (a consistently upward pattern on the price chart), this type of market is usually a trader’s paradise. The most important principle to remember when it comes to trends is that they are more likely to continue in the same direction, whether that’s up or down. Sideways Forex Market Sideways Forex Market Trend-following systems perform very well during a trending market. Unfortunately, that is not quite true in the case of sideways movements. With the latter, there is no room to maneuver and no room to allow potential profits to run. A sideways market, or a range, is essentially a narrow band of price action. Of course, many trading strategies have been developed to accommodate these kinds of traders. These strategies have clearly outlined entry and exit rules. Even popular minimum-price-target techniques have been devised for this very purpose. Trending markets and sideways markets are two broad categories of the type of forex market that traders need to recognize in order to apply the right trading tools and strategies. Read my “Identifying Trends: A Beginner’s Guide” article to find out how trends can be identified. Probabilities Probabilities Never forget that trading the forex markets is a business of probabilities, not guarantees. Common practice is to trade in the direction that has the highest probability of continuing its course of action. If you follow this golden rule, you will most likely see your potential profits grow. Having said that, however, the “odds” still need to be in your favor. If they are

3. not, you need to be fully prepared for the unpleasant feeling of “grieving” for your losses – and not let this grief cloud your judgement.