The common problem of Forex trader is they have to participate all day long in the market and this over trading is the main cause of losing money. The traders always complain why they cannot use the same and old strategy that they have used just moments earlier in Forex? It is a very common question for the traders and we are going to give you this answer. If you patiently read the rest of the article, you will realize how many mistakes you have been doing in Forex industry thinking all of these trades are interrelated.
If you can win a trade with the same strategy, you can use this strategy over and over again to win. This is the wrong idea that you can get from the market. When the currency pairs are interrelated in the market and can have an impact trading result. When the other currency is volatile, things might not the same for your trades. You have to understand that these trades are not interrelated in Forex. They are not going to affect your profits by the decision of your last trades. Due to the diversity of the market, the expert in the United Kingdom always suggest the new traders only to have one open position at a time. If you trade on multiple currency pairs at the same time then it will be hard for to assess the sentiment of the market on multiple currency pairs.
Trades are independent
Keep this thing very clearly in your mind that Forex trades are independent. No two trades’ setups are the same in Forex. When you are thinking of the market as a mechanism where you can repeat your success by placing the same strategy, you will not get your expected result. We can give you one live example that almost all traders have gone through. Imagine you are a Forex trader and you are trading GBP/USD. The market was in your favor and you paced a good trade which gives you a profit of 10 dollars. You become happy and begin to think that you have figured out the market.
There is no need for developing your strategy and you can trade the market for today with this strategy. You placed another trade with the same market trend. But to your surprise, you will find that the trend is over and you are losing money. You will act blazingly fast to close your trades but you will have to lose some of your dollars from your account. This happens when you begin to think that all these trades are the shadow of the past trades. These are all independent trades and have no relation with other trades. You have to analyze every time you are going for placing trades in your online trading account. Even the minor retracement of the trends are very important for your success. If you fail to spot the corrective pattern of any currency pair then chances are very high that you will have many losing trades during that phase.
Learn the wave theory
Elliot wave is one of the best ways to find the corrective patterns in any currency pair. If you are trading for full-time basis then make sure that you have clear knowledge about the minor and major trend correction. Always focus on trend trading during the retracement phase but make sure to use the price action confirmation signal. Some traders often use the Fibonacci retracement tools but when using it you should always use the most recent swing high and low.
Summary: The Forex market is dynamic in nature and you need to have the ability to adapt to the market dynamics. Always trade the market based on the major three types of market analysis. Focus on quality trade setup and trade along with the market trend to increase your win rate.