Trading Analysis – Paralysis: Overdoing it is More Common Than you Think
When you trade forex – or any other financial instrument, you will either be in a profitable position or a losing position. The market can only go in one of two directions, and as such the fundamentals of forex are actually very simple to understand.
However, many online traders all too easily end up becoming obsessed with watching the markets and analysing them. They overthink their every move, and become easily deceived as a result. They perceive the forex market as a sophisticated and complex entity where, in order to succeed, you need to learn some ‘magic formula’ or tricks of the trade.
Traders of this nature tend to attach too many indicators onto the trading platform. In doing this, they easily become confused and overwhelmed by all the information presented to them, and consequently they complicate matters even further. This usually leads them experience emotions such as frustration or anger, which in turn equate to losses.
Another mistake that some traders make is to purchase an expensive trading system that ultimately doesn’t work. These traders believe that they have finally got their hands on the perfect indicator-based trading system that will work under all market conditions.
Adopting this belief is a very common mistake made by countless traders, but learning how to rewire your approach to forex trading is very important if you wish to become an accomplished, long-term trader.
Simplicity – An Overlooked Component to Successful Trading
Instead of overanalysing the market or purchasing costly trading systems, it is better to keep everything about your approach to forex trading as simple and straightforward as possible.
You should develop a simple yet effective trading strategy that has been ticulously tested on a demo trading account. You should also have an unwavering confidence in your trading system, no matter which markets or timeframes you choose to execute it on.
This strategy should focus on in-depth technical analysis based on price, as this is the most powerful and effective way to profit from price movements. You should also approach the markets with patience and logic, to enhance your chances of performing effective market analysis that primarily results in profits.
By performing in-depth technical analysis based on general market trends, only then you will be able to perceive the market in an objective and simple manner. By becoming aware of price dynamics and price conditions in your chosen market, you will be one step closer to joining the minority of traders who experience success from forex trading.